Press Release

   

For More Information Contact the NJHCFFA
Communications Department:
609-292-8585 X142
For Release: May 2, 2008

 

MARK E. HOPKINS
EXECUTIVE DIRECTOR

CONTACT: Stephanie Bilovsky
PHONE: 609-292-8585
Date: May 2, 2008

 

MERIDIAN HEALTH SYSTEM CONVERTS ~$242 MILLION OF AUCTION
RATE BONDS TO FIXED AND VARIABLE RATE STRUCTURE

 

(Trenton) Today, the New Jersey Health Care Facilities Financing Authority (the "Authority") completed a conversion of approximately $242 million worth of auction rate bonds, issued on behalf of Meridian Health System ("Meridian"). 

 

In December 2007, Meridian closed on five tranches of auction rate securities, insured by Assured Guaranty, totaling approximately $242 million and maturing on July 1, 2038. For the first 6 to 8 weeks the rates were typically in the 3.5 to 4% range, however, after the collapse of the auction rate market, Meridian's auctions failed in February and interest rates were set at the maximum level of 12%.

 

Meridian decided to convert three tranches of the auction rate bonds into insured fixed rate securities; the remaining two tranches were then sold as variable rate demand notes using insurance for credit support and a letter of credit for liquidity. Because this was a conversion and not a primary issuance, the bonds had to be sold at par and to the maturity of July 1, 2038. 

 

The remarketing agent, UBS Securities, LLC, worked with Meridian and the Authority and received excellent support from the market. The fixed rate bonds were sold with a 5% coupon, and the three tranches closed on April 21st, April 22nd, and April 23rd. 

 

The two remaining tranches were converted to a variable rate on May 1st and 2nd, respectively. The shared initial weekly interest rate for those bonds was 2.60%.

 

Created in 1972 by an act of the Legislature to provide not-for-profit health care providers with access to low-cost capital, the Authority is the primary issuer of municipal bonds for New Jersey's health care organizations. During its 35-year history, the Authority has issued over $13 billion in bonds on behalf of over 140 health care organizations throughout the state.

 

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