Standard & Poor’s Boosts CMC-Union’s Credit Rating
June 8, 2010
Carolinas Medical Center-Union’s long-term, fixed-rate bonds have been upgraded to “A+” with a stable outlook by the worldwide rating agency, Standard & Poor’s Rating Services. The previous credit rating was “A” with a positive outlook.
Standard & Poor’s cited CMC-Union’s “sound management through a long-term lease with CHS (Carolinas HealthCare System), the third-largest public multihospital system in the nation” as a key factor in the higher rating. Other factors contributing to the increase were the hospital’s strong financial performance, excellent debt service coverage, ample liquidity, strong market share in Union County, and a strong local economy.
“In an economic environment that has resulted in far more hospital downgrades than upgrades, this is a tremendous accomplishment for the hospital and its staff,” said Dennis Phillips, executive vice president of Carolinas HealthCare System. “We look forward to working with the Union County Board of Commissioners on a lease extension that could result in a further improvement in the credit rating.”
Standard & Poor’s was poised to further raise CMC-Union’s credit rating to “AA-,” the same as CHS’s rating, if a lease extension beyond 2020 was negotiated and there was a related guarantee of CMC-Union's debt on a parity basis with CHS debt, and CHS committed additional capital funds. That action was deferred in February 2009 after negotiations did not produce a lease extension.
In its rating report, Standard & Poor’s said, “The stable outlook reflects the medical center’s sound management and generally strong financial profile with no immediate additional debt needs. We would consider an upgrade if CMC-Union extends its lease agreement with Union County and executes a debt guaranty agreement with Carolinas HealthCare System.”
A high credit rating allows the hospital to finance its debt with favorable interest rates, keeping its debt service costs low.
