Press Release

For More Information Contact the NJHCFFA
Communications Department:
609-292-8585 X142
For Release: August 7, 2008

 

MARK E. HOPKINS
EXECUTIVE DIRECTOR

CONTACT: Stephanie Bilovsky
PHONE: 609-292-8585
Date: August 7, 2008

 

APPROXIMATELY $26 MILLION ISSUED ON BEHALF OF
SOMERSET MEDICAL CENTER

 

(Trenton)  Today, the New Jersey Health Care Facilities Financing Authority (the "Authority") successfully closed on $25,930,000 in bonds on behalf of Somerset Medical Center ("Somerset") to currently refund all of the Authority's Series A bonds issued in 1994 and to acquire various pieces of equipment, including a CT scanner.   

 

            Upon the downgrading of FGIC (the bond insurer for the 1994A bonds) to below investment grade, combined with the downgrading of Somerset own rating "Ba2," the bondholder Morgan Stanley required that Somerset refund the bonds and terminate the total return swaps.  Somerset concluded that the most economical way to fulfill the request was to refund the bonds using variable rate demand bonds enhanced by a letter of credit provided by Commerce Bank.  Commerce Bank was purchased by TD Bank, N.A. before the bonds were refunded, therefore, the transaction is backed by a TD Bank letter of credit.

 

            While the documents allow for a conversion to other interest rate modes, the bonds were initially issued with a weekly interest rate.  The initial interest rate was 1.85%.

 

            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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