Performing the largest health care tax-exempt bond issue in Michigan in the last 25 years, Detroit-based Henry Ford Health System has restructured all of its existing debt. The nonprofit organization is expected to gain more than $125 million in present value savings, and a reduction of more than $10 million in annual interest expense from its transaction.
The system’s bonds resulted in orders totaling $3.6 billion, with a final sale of $1 billion in bonds, including $853 million of bond par amount, $113 million of bond premium, and $38 million of taxable debt.
The interest rate on Henry Ford’s new 30-year bonds is 3.7 percent, with an average total interest cost across all bonds of 3.5 percent.
Ed Chadwick, executive vice president and CFO for Henry Ford Health System, says the bond issue has allowed Henry Ford to completely restructure all system debt, including the debt from its newest member, Henry Ford Allegiance Health.
“After this bond issue, almost all of our debt will be low-cost fixed rate, which provides permanent interest savings, reduced liquidity risk, and substantial flexibility for future financings,” he says. “The substantial interest savings will allow us to continue to better serve our communities.”
Two weeks prior to the bond issue, Standard and Poor upgraded Henry Ford’s bond rating to ‘A’ with stable outlook, and Moody’s maintained the system’s ‘A3’ rating, upgrading the outlook from stable to positive.
Henry Ford Health System is a six-hospital network that provides health insurance and health care delivery, including acute, specialty, primary, and preventive care services.