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MUHC sells bonds to raise cash for new hospital

MONTREAL – McGill University Health Centre has sold C$764 million of bonds maturing in 2044 to help fund the construction of its new hospital, a facility that will consolidate most of its current sites at one new centre.

Scotia Capital was lead manager for the private placement of 6.632 percent bonds. Repayment of the principal is spread over the 34 year-term.

It’s Quebec’s largest private financing in the healthcare sector, and it may signal further bond floats are in store by public-private partnerships, in which governments join with companies to build and finance infrastructure projects. The Canadian Council for Public-Private Partnerships lists at least 25 federal and provincial infrastructure projects in the proposal stage.

Groupe immoblier santé McGill S.E.N.C. will design, build and maintain McGill’s Glen Campus project and through its subsidiary SNC-Lavalin Innisfree McGill Finance Inc., will handle financing. The debt is rated A (low) with a stable outlook by DBRS Ltd., the company’s seventh-highest rating. The Montreal-based hospital is responsible for payments to the project owner.

Quebec will cover capital costs, or about 68 percent of the monthly service payments over the life of the project, through a direct grant to the owner, according to a DBRS report.

The 500-bed hospital will combine five existing hospitals on a new site about five kilometers west of downtown Montreal and includes four buildings with 20 operating rooms, pediatric and adult in-care facilities, a cancer center and the Montreal Chest Institute. Construction is slated to begin this month and run through September 2014.

Posted July 15, 2010