Mercy Health, OH#s 2017A-C Revenue Bonds Rated #A+#

Stocks and Financial Services Press Releases Thursday December 7, 2017 16:02
NEW YORK--7 Dec--S&P Global Ratings

NEW YORK (S&P Global Ratings) Dec. 6, 2017--S&P Global Ratings assigned its 'A+' rating to Allen County, Ohio's $494 million series 2017A fixed rate revenue bonds and $91 million series 2017B adjustable rate revenue bonds issued for Mercy Health.

We also assigned our 'A+' rating to Mercy Health's $139 million series 2017C taxable bonds. At the same time we affirmed our 'A+' rating and underlying rating (SPUR) on fixed-rate long-term bonds and floating-rate notes issued for Mercy Health by various issuers. In addition, we affirmed our 'A+/A-1' rating on Mercy Health's $100 million series 2012B bonds backed by self-liquidity. At the same time, we affirmed our 'AA+/A-1' rating on the series 2010C bonds whereby the long-term component of the rating is based on both Mercy Health and the letter of credit (LOC) provider (Union Bank expiring August 2018) and the short-term rating is based solely on the short-term rating of the LOC provider.

The outlook on all ratings is stable. "The rating affirmation reflects Mercy Health's solid enterprise profile and diverse operations with coverage in seven distinct regions of Ohio and Kentucky," said S&P Global Ratings credit analyst Cynthia Keller. "The affirmation also reflects improved financial performance, which has accelerated year to date, under a largely all new management team since 2015." The stable outlook reflects Mercy Health's strong market presence in Ohio, its growing system integration which we believe could provide long-term benefits to the system, and adequate financial profile for the rating level. We believe a positive outlook or rating upgrade during the two years covered by our outlook period could be possible if Mercy Health's fiscal 2017 finishes on par with interim performance and continues into 2018. In addition, a positive action is predicated on retaining cash on hand near 200 days' and making progress toward improved unrestricted reserves relative to debt.

In addition, maintenance of Mercy Health's strong state wide presence and market leadership is also important at a higher rating level. We believe a lower rating or negative outlook is fairly remote due to Mercy Health's robust enterprise profile combined with overall improvement in its financial profile. However, if Mercy Health's financial profile does not generate at least 3x debt service coverage or if there is any material change in balance sheet metrics, we could consider a lower rating or negative outlook.


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