OREANDA-NEWS. S&P Global Ratings revised its outlook to positive from stable and affirmed its 'BBB' rating on Madison County Hospital Authority No. 1, Neb.'s 2008A-1 and A-2 bonds, issued for FaithRegional Health Services (FRHS), although proceeds from the proposed 2016A-1 bonds as well as proceeds from two unrated fixed-rate direct-purchase transactions totaling $23.4 million are expected to refinance all of FRHS' outstanding debt.

At the same time, S&P Global Ratings assigned its 'BBB' rating to, the authority's $32.1 million series 2016A-1 hospital revenue bonds, issued for FRHS. The outlook is positive.

"The positive outlook reflects FRHS' healthy operating performance and debt service coverage as well as benefits from this refinancing," said S&P Global Ratings analyst Cynthia Keller. "A higher rating is possible with further information on capital plans including potential debt, incremental improvement in balance sheet metrics, and continued strong cash flow despite anticipated revenue pressure."

We believe there is potential for an upgrade during the outlook period with continued improvement in balance sheet metrics, which would bring days' cash on hand and unrestricted reserves relative to debt closer to median levels. An upgrade would also be predicated on FRHS retaining its enterprise strengths and adjusting to lower reimbursement levels if necessary to keep generating solid debt service coverage. In addition, we will monitor FRHS' capital spending plans and any potential need for additional debt because depending on the magnitude, additional debt or higher-than-expected capital spending could be limiting rating factors.

A return to a stable outlook is possible if there is a significant downturn in financial performance, or material balance sheet weakening such that metrics are no longer in line with similarly rated credits.