Warm Greeting on Wall Street

Wall Street investors eagerly lined up in December to purchase $210 million in tax-exempt bonds being sold by NorthBay Healthcare to modernize its Fairfield hospital and make improvements on its downtown campus.

Seeing the health care system as a good investment, institutional buyers across the country enthusiastically entered bids for NorthBay Healthcare's bonds in amounts that were substantially higher than the available supply.

The demand, plus an uptick in the bond market week over week, resulted in a highly attractive interest cost of 4.97 percent. In all, 50 buyers snapped up portions of the entire package.

“This absolutely was a superb outcome,” remarked Stewart L. Carr of Cain Brothers, the financial advisor who helped put together the bond financing package. “It illustrates how attractive the organization's credit profile is in the market. It shows that people in the investment world know what's going on here.”

Timing was also a favorable factor in the deal as bond markets improved in just a few days. Another health care system from Maryland with a similar credit rating went to market a week later, but could do no better than a rate of approximately 5.25 percent. “That is a difference of hundreds of thousands of dollars in interest payments each year,” Carr explained.