Wall Street is bullish on Connecticut Children’s Medical Center ahead of the Hartford-based care provider’s plan to issue nearly $114 million in bonds.
The funds — to be borrowed at a fixed rate through the quasi-public Connecticut Health and Educational Facilities Authority — will be used to partially underwrite construction of a new patient tower on Connecticut Children’s Washington Street campus.
The care provider is expected to officially break ground on the $280-million, 195,000-square-foot tower April 28. When completed, it will add 71 additional beds, boosting capacity by about 38%.
It will include 50 new neonatal intensive care unit beds and six fetal care beds, which will support a new fetal surgery program that has been launched and will expand with the new tower.
CT Children’s will also renovate 40,000 square feet of existing hospital space in the areas of supply chain, facilities, an equipment depot, biomedical and environmental services.
On Wednesday, New York ratings agency Fitch Ratings said it assigned an A+ rating to Connecticut Children’s planned $113.9 million bond offering. The bonds are expected to be secured by a pledge of gross revenues, according to Fitch, with a maximum annual debt service payment of about $13.6 million.
Fitch said it believes the new patient tower will be a “once-in-a-generation transformational project.”
“The ‘A+’ rating reflects CT Children’s excellent market position as the only independent children’s hospital in the state of Connecticut, with a 90% market share in its primary service area, which includes Hartford and the surrounding counties, and a growing market share in its secondary service area,” Fitch said.
Fitch added that Connecticut Children’s operating performance has been uneven in the last five years, partially driven by the pandemic. But it maintains a leading market share in Hartford, Litchfield, Tolland and Windham counties and a growing market share in Fairfield, New Haven, Middlesex and New London counties as well as parts of New York and Massachusetts, according to Fitch.
The ratings agency said it “believes that the revenue from the additional beds in the new tower and from other strategic growth initiatives, especially in the secondary service area, and the easing of some of the sector staffing challenges, should stabilize operations … over the longer term.”
Fitch said the patient tower will be financed by the bond funds and philanthropy. It pegged the total project price tag at $326 million, which doesn’t includes plans for a $47-million, 900-space parking garage that has not yet been approved by the city of Hartford.
In response to the Fitch rating, Connecticut Children’s CFO Bridgett Feagin said “The inaugural rating marks an important milestone for Connecticut Children’s. Diversifying our capital structure allows us to focus on our commitment to transforming children’s health and well-being.”