IU Health assigned 'Aa2' rating on $725M of new debt

Indianapolis-based IU Health saw robust ratings on both existing debt and proposed debt affirmed or assigned as the system edges back to higher levels of operating performance, Moody's said May 30.

The "Aa2" rating on the new debt is for $725 million of bonds, which would take total debt for the 16-hospital system to $2.2 billion, Moody's said. 

"The assignment and affirmation of the 'Aa2' revenue rating reflects Moody's view that IU Health's strong demand and cost control measures will drive a steady improvement in margins toward historical levels and very good liquidity to support a sizable increase in debt," according to the research note.

The outlook for the system is stable as it faces competition in its market area and "significant challenges" from high labor costs and capital expenditure plans, including the consolidation plan for two downtown Indianapolis hospitals. 

Fitch Ratings affirmed its "AA" rating on IU Health bonds while revising the system's outlook from positive to stable May 31.

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