Moody's downgrades St. Luke's revenue bonds to 'A3', outlook stable

Moody's Investors Service has assigned an "A3" rating to Boise, Idaho-based St. Luke's Health System's planned $166 million series 2014A fixed rate revenue bonds and downgraded the health system's parity debt to "A3" from "A2."

St. Luke's is the largest health system in Idaho, and produces nearly $1.5 billion in revenues annually. The main driver of the downgrade was the 25 percent increase in St. Luke's debt that resulted from the issuance of the series 2014A bonds.

Other aspects of the health system's credit profile are positive, such as its long-term track record of strong operating performance and strong market presence.

While St. Luke's fiscal year 2013 results were weak, unaudited interim 2014 financials show stronger performance. Results in 2013 dropped to an operating margin of -0.4 percent and operating cash flow margin of 8.2 percent, which was their lowest mark in 11 years.

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