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Excellent Credit Rating Gives Confidence to University of Maryland Medical System during Bond Sale

By Faye Mergel
Published: Tuesday, November 17th, 2009

The University of Maryland Medical System (UMMS) plans to embark on a $250 million bond sale on the eve of its 25th founding anniversary. Administrators say they are confident that they will get good interest rates from bond buyers because of their excellent credit rating from the three major rating organizations in the United States. The proceeds will be used to improve patient services for its 11 hospitals, establish a comprehensive medical records system, refinance a huge portion of its debts, and prepare for an expected deluge of patients.

Excellent Credit Rating Gives Confidence to University of Maryland Medical System during Bond SaleBond specialists say the sale’s timing is ideal for UMMS since it currently holds a top notch credit rating, which will get them the best buyers available, aside from getting the best interest rates for a bond sale. The credit rating of UMMS shows that it is being managed well and is having a stable financial outlook.
If UMMS pulls out a successful deal next month, the third-largest health system in the region will use no more than $16 million to buy 90 acres of land at two separate spots in Hartford County. Administrators say the plan is part of their preparation for the realignment plan with Pentagon’s military base. They also see a need to expand their services since they project the area to be one of the fastest growing in Greater Baltimore.

The influx of patients will be caused by the Pentagon’s base realignment and closure (BRAC). Hospitals in Upper Chesapeake are already at capacity so they can no longer meet the demand of health care consumers. Bel Air and Havre Grace are the two hospitals serving the area but there is a great chance that they will not be able to meet the demand for BRAC, according to Harford Memorial Hospital.

But the bond sales is not solely done for projects in Hartford County. Hospital officials say they are trying to upgrade UMMS’ facilities. They plan to save millions of dollars by investing on their electronic medical records system as they upgrade the aging facility of many of the district’s hospitals. Officials also plan to refinance about half of its variable-rate debt. Experts say this will not only make UMMS more financially stable but will likewise help in maintaining their credit rating.

Both Standard & Poor’s and Fitch gave UMMS an “A,” a credit rating which means that it is doing well financially but not well enough to withstand adverse economy. Specialists explained that most hospitals are struggling with ratings that will impress lenders but UMMS is bound to get the best deals if they are charged with 5.6 percent interest.

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