July 01, 2011 8:37:10 am
Banks continue to invest in tax-exempt loans despite the expiration of the temporary debt incentives on December 31, 2010. Hospitals and health systems continue to be attractive to banks because
• these organizations generally hold an investment-grade credit rating,
• banks now prefer to directly purchase tax-exempt bonds after the financial market crisis in 2008,
• banks with insufficient credit ratings can still buy tax-exempt debt issued by healthcare organizations,
• banks continue to see low capital costs for tax-exempt loans, and
• many banks consider tax-exempt debt as a service to their customers.
However, healthcare organizations need to carefully evaluate these bank programs to ensure competitive pricing, convenient structure of the loan and the impact of the loan on the organization’s own credit rating.
Read more from the Healthcare Financial Management Association.
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