Debt de­bate threat­ens hos­pi­tal loans’ credit rat­ings

Modern Healthcare - - Front Page - Me­lanie Evans

Loans’ credit rat­ings hinge on debt-ceil­ing de­bate

Hos­pi­tal loans backed by Fed­eral Home Loan Banks could see credit rat­ings drop if the credit strength of the U.S. gov­ern­ment falls. Moody’s In­vestors Ser­vice and Stan­dard & Poor’s said last week that the nation’s top­notch credit could drop as talks be­tween the White House and Congress to raise the debt ceil­ing re­main stalled.

A lim­ited num­ber of not-for-profit hos­pi­tals have credit guar­an­tees from Fed­eral Home Loan Banks, which are gov­ern­ment spon­sored and also face risk of a down­grade.

Congress tem­po­rar­ily al­lowed Fed­eral Home Loan Banks to lend credit strength to hos­pi­tal bor­row­ers dur­ing the credit cri­sis. The home loan banks guar­an­teed bonds sold to short-term in­vestors as com­mer­cial banks fal­tered.

Hos­pi­tals and other health­care bor­row­ers made up 31 of the 187 bond deals that se­cured Fed­eral Home Loan Bank credit guar­an­tees, ac­cord­ing to fig­ures pro­vided by the home loan banks. Over­all, the bonds to­taled $4.6 bil­lion in fi­nanc­ing.

Health sys­tems in­clud­ing Ad­ven­tist Health Sys­tem, Win­ter Park, Fla., re­lied on the Fed­eral Home Loan Banks for credit

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