Ohio sold $440.4 million in bonds to finance upgrades to health-care facilities operated by the Cleveland Clinic.
The bonds mature between 2032 and 2035, yielding between 3.12% and 3.16%. They pay interest at 5%. The securities received a rating of Aa2 from Moody’s Investors Service and AA from S&P Global Ratings.
The rating reflects the Cleveland Clinic’s “strength as an international brand in highly complex clinical care and research and centralized governance model, which will drive strong demand and steady operating improvement off of lower than expected results in 2023,” Moody’s analysts wrote.
Ohio will loan the bond proceeds to the nonprofit Cleveland Clinic Health System.
The health system will use the issuance proceeds to fund capital expenditures. It forecasts spending $1 billion on capital projects in 2025, according to the official statement accompanying the sale of the bonds.
Cleveland Clinic operates 21 hospitals, most of which are in Ohio. It also runs five hospitals in Florida and one in London.
The bonds are limited obligations of the state of Ohio and general obligations of the Cleveland Clinic, secured by its revenue. The health system recorded $14.5 billion in unrestricted revenue in 2023.
BofA Securities, Inc served as lead underwriter on the issuance, purchasing the bonds for $501.7 million. The price reflected a premium of $62.8 million and a discount of $1.5 million. Kaufman Hall & Associates, LLC acted as financial advisor.