OHSU is going to the Wall Street well this week to borrow $109 million by selling revenue bonds. And they're planning to put another $125 million or so on plastic next month. And here I thought they were so strapped up there these days that there wouldn't be any revenue to borrow against.

This press release is pretty sketchy. But there are a few interesting tidbits. It looks as though most of this debt will be to refinance old debt, and that the money picture up there may be showing some slight improvement:

The series 2009A bonds are anticipated to be structured as traditional fixed rate bonds while the series 2009B bonds will be issued as weekly variable rate demand bonds (VRDBs) with a letter of credit (LOC) from U.S. Bank, N.A.... Bond proceeds will be used to refund close to $90 million in outstanding series 2005A&B revenue bonds, repay a line of credit that was used to refund series 2004 special revenue bonds, and fund $10 million in capital project needs.

OHSU's financial and operating profile is mixed. On an obligated-group basis, OHSU posted operating losses in the last two fiscal years despite profitable Hospital operations that yielded 4% operating margins in recent years. Lagging state appropriations have led to an increasing structural deficit in University's operations, and in FY'08, the obligated group reported an operating loss of $3.2 million. In response, management has embarked on an operational improvement plan that targets revenue enhancement and expense control and reduction. To date, these efforts have had a marked impact on profitability as year-to-date data for FY'09 show an operating gain for the obligated group.

Balance sheet metrics for the obligated group are weak for the rating category and exhibit a relatively high debt burden. At FY-end 2008, OHSU had 107 days-cash-on-hand (DCOH), a 56.9% cash-to-debt position, and a 6.9 times (x) cushion ratio. On a consolidated basis, OHSU's balance sheet is healthier with 158 DCOH, a 100.4% cash to debt position, and a 12.3x cushion ratio. With this issuance, OHSU's proforma maximum annual debt service (MADS) is estimated at $47.8 million, with an adequate historical proforma MADS coverage by EBITDA of 2.7x for the obligated group and 3.8x on a consolidated basis, at FY-end 2008. The Stable Rating Outlook is based on the expectation that OHSU will continue to reap the benefits of its operational initiatives, improve its overall operating performance, especially the University's, and strengthen its balance sheet.