KBRA Assigns A- Long-Term Rating to El Paso County Hospital District (TX) Revenue Refunding Bonds, Series 2024; Stable Outlook
10 Oct 2024 | New York
KBRA assigns A- long-term rating with a Stable Outlook for the El Paso County Hospital District (the "District") Revenue Refunding Bonds, Series 2024 (the "Bonds"). The long-term rating reflects the District’s role as a safety net provider and Level I trauma center for El Paso County, TX (the “County”); rebounding patient volumes following the COVID-19 pandemic and the addition of the new surgical hospital; adequate, stable operating cash flows supporting repayment of debt; and manageable future capital needs.
The Stable Outlook is predicated upon the District’s on-going ability to generate stable operating cash flows sufficient to service debt obligations. The Stable Outlook further assumes gradual moderation in leverage ratios, and the maintenance of stable levels of liquidity.
Key Credit Considerations
The rating was assigned because of the following key credit considerations:
Credit Positives
- The District’s role as the only safety net healthcare provider in the County plays a critical role within the County’s public health mission.
- Adequate, stable operating cash flows supporting repayment of debt.
- Manageable future capital needs.
Credit Challenges
- Macroeconomic environment has placed upward pressure on wages.
- Considerable reliance on governmental payors and charity care, which somewhat constrains the District’s ability to improve margins.
- Weak, though stable, unencumbered liquidity.
Rating Sensitivities
For Upgrade
- Significantly strengthened, sustained improvement in operating performance leading to increased liquidity and moderating leverage.
- While not expected, fundamental changes in how governmental payors reimburse providers for care.
For Downgrade
- Declining patient volumes which reduce the District’s ability to maximize net patient revenues.
- Additional debt issuance without a commensurate increase in resources available for repayment.
To access rating and relevant documents, click here.