The Grossmont Healthcare District (GHD), a local public agency preparing to sell up to $115 million in general obligation bonds that will help finance capital improvement construction projects at Grossmont Hospital in La Mesa, has announced the rating for its bonds has been set at “AAA,” the highest rating possible.
“The Triple-A rating is great news for local taxpayers because it affirms the creditworthiness of the bonds, as well as the utmost confidence for institutional investors in the District’s financial stability,” said Dr. John Hardebeck, 2007 president of the GHD board of directors. “This highest possible credit rating means the bond sale transaction costs will be lower, which means bond revenues will go further for infrastructure upgrades and patient improvements at the hospital.”
The bond sale, scheduled for mid-July, follows the passage on the June 2006 ballot of Proposition “G,” a District-sponsored, $247 million bond measure that East County voters approved by more than 77 percent, well above the two-thirds required. Recently, the GHD board of directors approved an initial sale of up to $115 million in bonds, the proceeds of which are earmarked to pay for completion of the hospital’s emergency and critical care center and educational facilities for training healthcare professionals. Two additional bond sales, not to exceed the maximum $247 million as allowed under the ballot measure, are tentatively scheduled for 2010 and 2012, depending on construction progress and market conditions.
According to GHD officials, the District’s initial series of bonds received a favorable “A1” rating from Moody’s Investor Services, a recognized and widely utilized independent source for credit ratings on debt involving sovereign nations, corporations and municipalities. While the “A1” rating ranks near the top of Moody’s 10-tier scale, the District’s purchase of bond insurance increased the District’s Series 2007 bond offering to “AAA,” the highest rating possible. The U.S. government, for instance, has a top, Triple-A rating.
GHD purchased its bond insurance from Ambac Financial Group, Inc. (NYSE:ABK), a New York-based guarantor of public finance and structured finance obligations. The Series 2007 bonds will be sold through Goldman Sachs, a leading global investment banking, securities and investment management firm. Reviewing the District’s bond transaction activities to ensure accountability and transparency is an 11-member Independent Citizens’ Bond Oversight Committee.
The Grossmont Healthcare District, a public agency that supports health-related community programs and services in San Diego's East County region, serves as landlord of the hospital, including ownership of the property and buildings on behalf of local taxpayers. Formed in 1952 to build and operate Grossmont Hospital, the District is governed by a five-member board of directors, each elected to four-year terms, who represent nearly 500,000 people residing within the District's 750 square miles in San Diego's East County. In 1991, the District leased the hospital's operation to Sharp Healthcare under a 30-year lease that runs through the year 2021. For more information about GHD, visit www.grossmonthealthcare.org.