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Article: Finance Strategies: Hospital Flock to "Restricted-Affiliate" Structure.
- Article from:
- The Bond Buyer
- Article date:
- March 16, 1999
CopyrightCOPYRIGHT 1999 SourceMedia, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Compared with the corporate market, the municipal bond market has traditionally been tough on its borrowers. Take the bonds of not-for-profit hospital systems. The time-honored structure of such issuance employs what bond lawyers call "joint and several/ obligated group." This arrangement, a very good deal for investors, stipulates that all hospitals within a group are individually and as a group on the hook for debt issued by any one of them.
This structure, however, contrasts sharply with that used in the corporate bond market. Corporations - and this includes for-profit hospital systems - have typically issued unsecured debt, not backed by specific revenue ...