City of Hope recently issued a $60 million bond to help finance construction and renovation, reflecting the institution’s unprecedented growth over the last several years.
Funds from the bond issuance will finance the expansion of radiation oncology services, upgrades to transfusion medicine facilities and refurbishment of the former hospital, such as renovation of East Unit A, which opened earlier this year.
The bond also covers some remaining debt from the construction of Helford Clinical Research Hospital, refinancing the outstanding balance at a lower, fixed interest rate.
A bond is a certificate issued by a government or corporation that states the amount of a loan, the interest to be paid, the time for repayment and the collateral pledged. According to Terry Blackwood, chief financial officer and treasurer for City of Hope, the bond funds various projects while improving City of Hope’s financial position.
“This is a very competitive rate and puts us in a much-improved position with respect to our outstanding debt,” Blackwood said.
Notably, Standard & Poor’s (S&P) bond ratings recently upgraded City of Hope’s credit rating from BBB+ to A-, due to improved financial performance and increased liquidity, according to Blackwood. S&P is one of the most prominent credit-rating agencies in the world.
Union Bank of California purchased City of Hope’s entire tax-exempt bond, which carries an average interest rate of 4.76 percent. “We have a very good relationship with Union Bank,” said Blackwood. “Their investment in our institution continues that positive association, and we really appreciate their support.”
Blackwood also noted the key role played by City of Hope’s legal department in developing the bond issuance. In particular, he called out the work of General Counsel Robert Stone and Deputy General Counsel Cristin O’Callahan. “They were instrumental in this effort; we couldn’t have done it without them,” Blackwood said.
City of Hope will pay back the loan using funds obtained through normal Medical Center and Development Group revenue channels, according to Blackwood. The bond holds a term of 25 years.