Moody's Investors Service assigned its "A3" issuer default rating to Janesville, Wis.-based Mercyhealth, affecting approximately $649 million of debt.
Concurrently, Moody's affirmed its "A3" rating on Mercy Alliance Inc., whose bonds became a parity obligation of Mercyhealth.
Janesville-based Mercy Health System and Rockford (Ill.) Health System recently joined forces to become Mercyhealth.
The assignment and affirmation are a result of several factors, including the health system's strong market position, solid financial performance, growing balance sheet metrics. Moody's also favorably acknowledged the health system's ability to merge two separate entities into one unified enterprise in a short timeframe. The rating is constrained by market wide competition, which is expected to intensify, and the health system's high capital spending plans.
The outlook is stable, reflecting Moody's expectation that the health system will maintain its favorable financial performance despite a period of elevated capital spending.