NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) has assigned a BBB long-term rating and Stable outlook to the Public Finance Authority’s Taxable Revenue Bonds, 2017 Series, payable solely from Albert Einstein College of Medicine (AECOM) promissory notes (“the Notes”) and guaranteed by Montefiore Medical Center (MMC).
In connection with the issuance of the Bonds, U.S. Bank National Association, acting as the trustee, will receive a full security interest in the Notes and Guaranty. The Notes are payable first by AECOM resources and further supported by the unconditional and irrevocable guaranty by MMC of debt service and other debt-related amounts due on the Notes. KBRA cannot conclusively determine whether AECOM operations could support full and timely repayment of the Notes. Thus, KBRA looks through AECOM and evaluates MMC’s credit position as the source of repayment. As such, the BBB rating and Stable outlook reflects the credit profile of MMC as guarantor of the Notes.
The 2017 Taxable Revenue Bonds are an unsecured obligation of the Public Finance Authority, payable from payments made by AECOM to the Trustee. The Notes are backed by the Guaranty (between MMC and the Trustee) which provides for the absolute, unconditional and irrevocable guaranty by MMC for the prompt payment of debt service and other debt-related amounts due on the Notes. The guaranty supports the repayment obligations on the Notes, not the Bonds. The Authority will assign to the Trustee all of its rights and interests in and to the three Replacement Negotiable Promissory Notes and the Guaranty and all other payments, revenues and receipts in all Funds and accounts established pursuant to the Indenture.
Montefiore Medical Center is a New York not-for-profit corporation. As the flagship academic medical center of the Montefiore Health System, MMC is one of the largest healthcare providers in New York City. KBRA believes that the Medical Center’s structure, policies, and procedures provide a strong framework for managing its financial operations, enterprise risk management, and debt issuance. Management has established the customary policies, procedures, and business strategies required to steer the Medical Center in the highly regulated healthcare environment. KBRA has had extensive communication with the management team and found it to be highly skilled and highly knowledgeable of the healthcare industry.
KBRA is concerned about the intrinsic weakness and the ongoing challenges faced by healthcare providers in MMC’s service area. KBRA also understands that the Medical Center’s impactful role in providing healthcare in this particularly challenging market is well-recognized by city, state and federal healthcare authorities.
The rating assignment is based on KBRA’s General Revenue Bond Methodology.
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About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).