Phoebe Putney Health System remarketing 2008, 2010 bond issues

ALBANY — The Phoebe Putney Memorial Hospital finance committee recommended action Wednesday on the remarketing of the variable rate direct placement 2008 and 2010 bonds that had been previously issued by the Hospital Authority of Albany-Dougherty County.

Officials say the current market rates for high credit-quality tax exempt securities creates a favorable opportunity for the Hospital Authority and Phoebe Putney Health System to reduce the amount of future interest costs on the $187.8 million outstanding debt balance from the 2008 and 2010 bond issues.

“We are constantly evaluating market conditions and looking for opportunities to reduce the cost of our debt portfolio,” said Joel Wernick, president and CEO of the health system, said Wednesday. “Today we are bringing forward a management recommendation to remarket our current 2008 and 2010 direct placement bond issues, which will enable us to reduce the cost of this debt.”

Kerry Loudermilk, chief financial officer for the health system, said the 2008 issues were for a total of $90 million with Bank of America, and the 2010 issue, at about $97 million, is with JPMorgan Chase. Phoebe is currently paying 1 percent on the debt, he said.

The health system requested proposals from nine banks, and based on current rates is anticipating a 20-30 basis point spread reduction in proposed interest rates compared to existing rates associated with the current direct bond placements, officials said, which would result in a projected $375,000 to $565,000 annual interest cost savings.

The final figures depend on the final executed rates.

“The remarketing of the 2008 and 2010 bond issues is very similar to an individual refinancing their home mortgage when rates are lower in order to reduce their monthly mortgage payment,” Wernick said.

From the recommendation came a resolution approving the remarketing of the bond issues and approval of the necessary indenture modifications and conversations to complete the process that will be brought to the health system board for approval.

The resolution went before the full hospital board board later Wednesday and was approved.