Louisville Medical Center Laundry, KY Revenue Refunding Bond Outlook Revised To Negative From Positive

Stocks and Financial Services Press Releases Wednesday June 27, 2018 08:58
--27 Jun--S&P Global Ratings

CHICAGO (S&P Global Ratings) June 26, 2018--S&P Global Ratings revised its outlook to negative from positive and affirmed its 'BBB+' long-term rating on Louisville & Jefferson County Metro Government, Ky.'s $3 million series 2012 fixed-rate laundry revenue refunding bonds issued for Louisville Medical Center Laundry (LMC Laundry). The bonds are supported by a pool of revenue streams from user institutions that use a share of the laundry services provided by LMC.

The bonds are rated under a "weak link" structure, and according to our criteria, the rating on LMC Laundry reflects the weakest rating among the participants that support the LMC Laundry, which is currently Catholic Health Initiatives (CHI). However, CHI was deconsolidated with the University of Louisville Medical Center (UMC) in fiscal 2018, and UMC is now operating independently.

"The negative outlook reflects our view that the weakest member in the pool could change over the coming months, given CHI's divestiture from UMC," said S&P Global Ratings credit analyst Allison Bretz. "Pending an evaluation of UMC, it is possible it could now be the weakest member of the pool. We plan to complete a full review of UMC in the next few months, at which point we will update the rating on LMC Laundry.

" The 'BBB+' rating reflects our long-term rating on CHI, which is currently the lowest-rated member of the pool.
The user contract for the laundry is between LMC (the general manager) and three primary users:
UMC (unrated; currently under evaluation),
Norton Healthcare ('A-'), and
KentuckyOne Health ('BBB+', as a part of CHI).

A lower rating is possible depending on our assessment of UMC's financial and enterprise profiles. We would also lower the rating in the event we lower the rating on CHI, although CHI currently has a positive outlook. A return to a stable or positive outlook depends on our ultimate assessment of UMC's credit quality.

Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.

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