Hospitals in California Adjust to Tighter Market for Bond Financing

California hospitals are facing new hurdles getting financing through the bond market because of the tightened credit market and are paying higher interest rates, the Sacramento Bee reports.

According to an analysis of California Debt and Investment Advisory Commission data, about $6.18 billion in hospital bond deals have been done this year, compared with $7.6 billion last year.

Jan Emerson, vice president of communications for the California Hospital Association, said, "We're hearing anecdotal information about hospitals scaling back projects, facing higher rates or other credit restrictions."

In a presentation to the California Health Facilities Financing Authority, Morgan Stanley Managing Director John Landers said the collapse of Lehman Brothers and other financial firms has resulted in significant changes in the market for long-term, tax-exempt California hospital bonds.

However, Landers noted that an increase in individual investors searching for deals has helped the market for hospital bonds (McIntosh, Sacramento Bee, 11/13).