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May 29, 2024

Fitch gives A+ rating to pending $669M Yale New Haven Health bond issuance; $333M will be used for capital spending

HBJ FILE PHOTO Yale New Haven Health

Fitch Ratings said Tuesday it has assigned A+ ratings to $669 million in bonds that will be issued on behalf of Yale New Haven Health (YNHH).

Proceeds from the bond issuance are expected to be used to refund the health system’s existing debt, as well as to provide approximately $333 million to support Yale New Haven’s capital spending program.

Fitch outlined several major capital projects Yale New Haven Health has underway or planned, including an $840 million neurosciences center on the St. Raphael campus.
Its other major capital project under evaluation is a comprehensive outpatient center in Meriden. Most other capital spending will be directed at infrastructure improvements, technology and equipment needs, and additional ambulatory access centers, according to Fitch.

The ratings, issued with a stable outlook, are for approximately $159 million series 2024A put bonds, $333 million series 2024B variable rate demand bonds and $177 million 2024C fixed rate revenue bonds to be issued by the Connecticut Health and Educational Facilities Authority on behalf of YNHH.

Fitch also said it affirmed the health system’s outstanding debt and Issuer default rating at A+, and affirmed the short-term rating on its bond series supported by self-liquidity at F1+.

The bonds are expected to price the week of June 10, Fitch said.

Fitch said the A+ rating reflects its view that YNHH is implementing steps “that are expected to improve operating results over time supported by recent volume growth,” as well as institutional characteristics that include its local and regional market presence and “brand recognition for tertiary and quaternary care,” and a closer alignment with the Yale School of Medicine.

The A+ rating is further supported by Fitch’s view that the system has sufficient funds available to support completing its large tower expansion project that includes a neurosciences center. Management is also expanding the system’s primary care access, “which will further drive the already highly utilized YNHH's high end services at its flagship Yale New Haven Hospital,” Fitch said.

The stable outlook reflects Fitch's expectation that the health system will ultimately return to stronger operating results, “but at a level lower than had been recorded historically,” the ratings firm said. Fitch added that it anticipates system operating results in fiscal year 2024 will be “break-even,” with further financial recovery in 2025 and beyond.

Fitch added that the current rating does not factor in the potential acquisition of three Connecticut hospitals and a medical group from the for-profit Prospect Medical Holdings, for which YNHHS signed a $435 million asset purchase agreement in October 2022. YNHHS has filed a lawsuit seeking to void the deal, claiming Prospect violated terms of the agreement.


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