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Mayo Clinic to sell $600 million in bonds to pay for projects and pay off previous bonds

Mayo Clinic will issue the bonds, in partnership with the City of Rochester and the City of Phoenix, to pay for Minnesota and Arizona projects and to pay off a $200 million bond issue from 2012.

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The Mayo Clinic in Rochester. Forum News Service
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ROCHESTER — Mayo Clinic is issuing $600 million in bonds, in partnership with the City of Rochester and the City of Phoenix, to pay for Minnesota and Arizona projects and to pay off a $200 million bond issue from 2012.

A total of $300 million of Minnesota Health Care Facilities Revenue Bonds are slated to be sold. The same amount of Arizona bonds are set to be sold.

The Rochester City Council recently voted to approve its participation in issuing the bonds. Sponsoring the bond issue does not cost the city anything.

“We’re issuing $100 million in new debt in Rochester plus $200 million refunding a previous issue for a total of $300 million. The Arizona issue is $300 million in new debt,” explained Mayo Clinic spokeswoman Ginger Plumbo.

The 30-year bonds are scheduled to be sold on March 24. They are typically purchased by large investment groups. It’s unlikely that individual local investors will end up with any of these bonds.

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Moody’s Investor Service has rated the upcoming bond sales at Aa2 and Aa2/VMIG 1. Moody’s, which only has two rating levels higher, has ranked all of Mayo Clinic’s credit on its bond issues and outstanding debt at that level since 2001.

“Its excellent clinical reputation is buttressed by a strong reputation for research; during the onset of the pandemic, Mayo Clinic was an early and leading provider of laboratory testing for Covid infections and has been a leader in developing and testing therapies to treat the disease,” according to Moody’s ranking on March 14. “Patient demand is very high with most patients effectively self-referring to Mayo Clinic; the organization's reputation for diagnosing and treating complex conditions results in very high case mix and generally high reimbursement.”

Large bond sales are not unusual for Mayo Clinic to use to raise funds.

Mayo Clinic issued $500 million in bonds in 2021 and $200 million in 2018.

Since 2006, it has raised $2.3 billion from the direct sale on bonds. It has also raised $2.4 billion, including this latest issue, by working with the City of Rochester to sell bonds in the past 10 years.

Moody’s tallied Mayo Clinic’s total outstanding debt at “approximately $4.7 billion.”

Jeff Kiger writes a daily column, "Heard on the Street," in addition to writing articles about local businesses, Mayo Clinic, IBM, Hormel Foods, Crenlo and others. He has worked in Rochester for the Post Bulletin since 1999. Readers can reach Jeff at 507-285-7798 or jkiger@postbulletin.com.
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