Ask the Experts: Preparing for the Annual Bond-Rating Review

Our bonds are rated by two of the three major rating agencies, and our annual reviews are coming up. What can we do to prepare, and should we do anything different this year?

Answer: A couple of things come to mind. First, we recommend assembling some slides to complement the questionnaire that rating agencies asked you to complete. A dozen slides should be fine, and can include an overview of the system, market and service area, staff, historical FY performance, and YTD performance along with recent/ongoing initiatives. It’s also a great opportunity to have a couple of nice photos of your core facilities. The CEO and CFO should be on the call to take the analyst through the slide deck.

Second, if you are rated by Standard & Poor’s, this year may be your first review since S&P revised its rating criteria for stand-alone hospitals and small systems. We are seeing some unexpected upgrades—and, unfortunately, some downgrades as well—as a result of the change. It’s a good idea to let your senior management and board know there is the possibility for a rating change due to the criteria, regardless of how your organization performed in the last year.

This answer was provided by: Pierre Bogacz, managing director, HFA Partners, Tampa, Fla., and a member of HFMA’s Florida Chapter.

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