Moody's Investors Service has assigned an "Aa3" rating to $278 million of Indianapolis-based Indiana University Health's proposed series 2015A fixed rate tax-exempt bonds.
The rating assignment was supported by a number of factors, including IUH's very strong margins and investment position.
The rating was also supported by the health system's leading market position in the greater Indianapolis area and state of Indiana, limited pension obligation as a defined contribution plan and manageable debt structure risks, according to Moody's.
IUH also faces some challenges, which were considered for the rating assignment, such as continued sizeable declines in patient volume, the presence of several large competitors in its service area and high dependency on state payments to support Medicaid patients.
Although fiscal year 2014 margins will be hard to sustain given revenue pressures, Moody's said it expects recent improvement in margins and investments to be
able to support a moderate amount of new debt or higher capital spending, if needed. IUH is currently considering consolidating its two large downtown adult facilities.
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