Fitch Affirms Hospital Sister Services, IL's Self-Liquidity Rating at 'F1+'
OREANDA-NEWS. Fitch Ratings has affirmed the 'F1+' short-term ratings on the following revenue bonds issued through the Illinois Finance Authority on behalf of Hospital Sister Services' Obligated Group:
--$65.9 million series 2012H;
--$89.5 million series 2012I.
KEY RATING DRIVERS
STRONG FINANCIAL PROFILE: Fitch currently rates Hospital Sister Services' long term obligations 'AA-'/Outlook Stable. The long-term rating reflects the strength of Hospital Sisters Services, Inc.'s (HSSI) strong liquidity position, light debt burden, which results in strong coverage of maximum annual debt services, and improving operating profile. Fitch believes the 'AA-' rating allows for strong capital markets access.
LIQUID RESOURCES AVAILABLE FOR UNREMARKETED PUTS: The 'F1+' rating reflects HSSI's long-term credit quality, as well as the adequacy of internal liquidity resources to meet optional tenders on its outstanding series 2012 variable rate demand bonds. Such resources include cash and cash equivalents and highly liquid, highly rated investments. Investments are discounted based on Fitch's criteria. At Sept. 30, 2015, HSSI maintained highly liquid resources sufficient to cover the maximum mandatory put on any given date in excess of Fitch's expected level of 1.25x.
MAINTENANCE OF LONG-TERM CREDIT QUALITY: Fitch expects Hospital Sisters Services Obligated Group to maintain long-term credit quality and adequate internal liquid resources to maintain the 'F1+' short-term rating. Failure to maintain a long-term rating in the 'AA' category and sufficient liquid resources would likely result in the lowering of the short-term rating.
HSSI is composed of 14 inpatient hospitals with eight facilities in Illinois and six facilities in Wisconsin. In fiscal 2014, the system had 1,951 beds in operation and total revenue of $2.1 billion. In FY 2014 the Obligated Group generated 92.9% of total revenues and 90.0% of total assets of the consolidated entity.
'F1+' SHORT-TERM LIQUIDITY RATING
The 'F1+' rating reflects HSSI's long-term credit as evidenced by its 'AA-' long-term rating, as well as the adequacy of eligible cash and investments to fund any un-remarketed puts on its $155.3 million of variable rate demand bonds outstanding. At Sept. 30, 2015, HSSI had a total of approximately $385.1 million of highly liquid, unrestricted cash and fixed income securities available to fund any un-remarketed puts. Fitch has received a written internal procedures letter from the organization, which outlines internal policies to meet any funding requirements and receives monthly investment reports, which are used to monitor HSSI's internal liquid resources relative to its cash and investment position relative to its funding exposure.