Bond offerings for hospitals, health systems and other providers dropped more than 25 percent from 2012 to 2013, totaling only $27.9 billion.
According to an HFA Partners article, a few factors influenced hospitals' appetites for taking on debt, despite the historically low interest rates.
Last year, hospitals focused more on paying down existing debt, building cash on hand or turning to projects like electronic health records that generally don't require as much long-term debt as building a new inpatient tower. Many credit rating agencies have indeed shown the median days cash on hand for hospitals and health systems rose in 2012, a trend that likely continued in 2013.
When hospitals decided to hunt for bonds, many went directly to banks, according to the article. HFA Partners said direct bank placements represented $19.1 billion of borrowing last year.
HFA Partners expects 2014 will be "bleak" again for healthcare borrowing. "Bond dealers expect it to be the second worst year for [municipal] issuance in a decade, with some predicting the lowest volume since 2000 as [federal government] tapering pushes interest rates higher and makes refundings less attractive," according to the article.
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