Debt debate threatens hospital loans’ credit ratings
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