Deal of the Year 2017 - Southeast: Kentucky EDFA (Owensboro Health)

Owensboro Health in western Kentucky provides a broad range of primary, secondary and tertiary healthcare services through its affiliates.

The nonprofit health system’s flagship facility is the 447-bed Owensboro Health Regional Hospital, which operates in a bond-financed replacement hospital that opened in 2013.

Seizing on favorable market conditions, the health system this year advance-refunded callable maturities of its 2010 bonds to finance the new hospital.

The $473 million deal signified the first use of bond insurance and a surety bond in place of a debt service reserve by a healthcare financing since the credit crisis.

With Assured Guaranty wrapping $100 million of various maturities, that portion of the deal generated strong demand from investors and was 25 times oversubscribed before pricing tightened.

Overall pricing allowed yields to be reduced by between 5 and 16 basis points across the curve, resulting in net present value savings of $62 million or nearly 14% of refunded par amount.

Using insurance and a surety bond, the deal resulted in more than $20 million of additional savings compared with a traditional non-insured financing.

VOICEOVER: Owensboro Health in Western Kentucky provides a broad range of primary, secondary and tertiary healthcare services through its affiliates. The nonprofit health system’s flagship facility is the 447 bed Owensboro Health Regional Hospital, which operates in a bond-financed replacement hospital that opened in 2013.

Seizing on favorable market conditions, the health system this year advance-refunded callable maturities of its 2010 bonds to finance the new hospital. The $473 million deal signified the first use of bond insurance and a surety bond in place of a debt service reserve by a healthcare financing since the credit crisis.

With Assured Guaranty wrapping $100 million of various maturities, that portion of the deal generated strong demand from investors, and was 25 times oversubscribed before pricing tightened. Overall pricing allowed yields to be reduced by between 5 and 16 basis points across the curve, resulting in net present value savings of $62 million or nearly 14% of refunded par amount. Using insurance and a surety bond, the deal resulted in more than $20 million of additional savings compared with a traditional non-insured financing.