NEW YORK - (Business Wire) Fitch Ratings has assigned an 'AA-' underlying rating to $75.7 million of Delaware Health Facilities Authority variable rate refunding revenue bonds issued on behalf of Bayhealth Medical Center Project (Bayhealth), series 2009B and C. Fitch has also affirmed the 'AA-' rating on Bayhealth's outstanding long-term debt. The Rating Outlook is Stable.
The series 2009 B and C bonds are supported by two separate letters of credit from PNC Bank and Wachovia Bank. Proceeds will be used to refinance Bayhealth's series 2002 and 2003 auction rate bonds. Fitch was not asked to assign ratings based on bank support for the series 2009B and C bonds.
The underlying 'AA-' rating reflects the continued strength of Bayhealth's operating performance and its dominant market share, growth in clinical service lines, and solid liquidity. Main credit concerns are Bayhealth's increased debt burden and its exposure to governmental payors. The Stable Outlook reflects Fitch's belief that Bayhealth will continue to generate strong cash flow which over time should ease Bayhealth's leveraged position, provide for stable debt service coverage, and grow Bayhealth's liquidity. For more detail on Bayhealth, see Fitch's report, 'Bayhealth Medical Center (Delaware Health Facilities Authority) - rev bonds ser 2009A', dated Sept. 30, 2009, and available on Fitch's web site at 'www.fitchratings.com'.
Headquartered in Dover, Delaware's state capital, Bayhealth is a two-hospital system that consists of Kent General Hospital (206-staffed beds) and Milford Memorial Hospital (108-staffed beds). Total revenue in fiscal 2008 was $354.3 million. Bayhealth has covenanted to provide bondholders with audited financial statements and quarterly disclosure (includes a management discussion and analysis, balance sheet, income and cash flow statements, and utilization statistics). Bayhealth disseminates audited yearly financials through the Municipal Securities Rulemaking Board (MSRB), and it will begin disseminating quarterly statements through the MSRB starting the fiscal quarter ending June 30, 2010. Fitch notes this as a positive change since Bayhealth's quarterly disclosure is currently made available to bondholders only upon written request.
Additional information is available at 'www.fitchratings.com'.
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Fitch Ratings, New York
Gary Sokolow, 212-908-9186
Eva Thein, 212-908-0674
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