The Hospital Finance Update offers hospital financial executives a comprehensive market update on interest rates, hospital bond issues, credit spreads, and rating actions.
Each issue of the Hospital Finance Update includes the following data:
- Hospital credit spreads and issuance volumes
- Hospital tax-exempt bond markets
- Hospital tax-exempt revenue bond issues
- Hospital bond rating actions
Understanding the Data
Chart: Credit Spreads and Issuance Volumes
Premium paid by acute-care borrowers over the "AAA" G.O. rate in the public bond markets, and total issuance volumes.
Credit spreads are reported for the AA, A and BBB rating categories based on the TruSpread® formula (total issue credit spread), which is proprietary to HFA Partners and calculates the present value of credit spreads for the entire bond issue after adjusting for maturity dates and amounts. TruSpread® is the difference between the issue's all-in yield and the blended "AAA" G.O. rate, taking into account all maturities. TruSpread® is calculated to final maturity regardless of whether the bonds were issued at a premium, a discount, or par. For a discussion of our formula, read A Better Way to Track the Hospital's Cost of Debt.
Issuance volumes by rating category are shown on the secondary axis (bottom of chart).
The data is compiled by HFA Partners from bond issues priced in the last 30 days from date of publication and excludes the following: variable rate debt, taxable debt, bank direct placements, other types of limited offerings, general obligation and tax-supported debt, remarketings, and small issues ($15 million and less). We occasionally include deals that do not meet the above criteria if we consider them meaningful.
Charts: Tax-Exempt Bond Markets
The first chart shows two benchmark rates: the 30-year benchmark "AAA" General Obligation index used by underwriters to price fixed rate bonds, and the short-term SIFMA index they use to price 7-day floating rate bonds. Add credit spreads to the 30-year index to arrive at total yield.
The second chart shows long-term municipal bond fund flows, which are correlated to changes in municipal yields (the exact relationship between rates and fund flows has been somewhat of a chicken-and-egg debate for years). Inflows are shown in green and outflows in red.
Table: Hospital Tax-Exempt Revenue Bond Issues
The data behind the Hospital Credit Spreads and Issuance Volumes chart. Each acute-care hospital bond issue sold in the last 30 days is included with its final maturity, spread to the "AAA" benchmark yield for the longest maturity, and TruSpread® calculated to first optional redemption date and to final maturity.
Table: Hospital Bond Rating Actions
Hospital bond rating and outlook changes from the three major rating agencies in the last 30 days. Affirmations are excluded. Tax-supported issuers are included starting with the April 2017 issue. To view current bond ratings for all rated hospitals, click here.