S&P upgrades Oklahoma hospital authority’s rating to CCC

Norman Regional Health System

S&P Global Ratings on Thursday upgraded the revenue bond rating for Oklahoma’s Norman Regional Hospital Authority to the junk level of CCC from D after the health system made a missed Sept. 1 debt service payment on Oct. 16. The outlook is negative.

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The nearly $12 million payment was made possible by the authority’s sale of $40 million of unrated senior bonds to majority bondholders, who were provided liens and security interest in the authority’s real and personal property. The 2026 bonds, which mature in 2031, have priority over bonds issued in 2016, 2017, and 2019 for Norman Regional Health System.

S&P, which downgraded the authority to D from CC in September after launching a review on Aug. 31, said the negative outlook on the CCC rating reflects an at least one-in-three chance of a rating downgrade over the next year.

“The current rating reflects improving (maximum annual debt service) coverage and unrestricted reserve trends, while the negative scenario reflects NRHS’ vulnerability to adverse financial developments, such that a return to recent weaker performance would pressure the system’s ability to make full and timely debt service payments during the next year,” S&P said.

The health system said it views the upgrade “as a positive step and a return to our rating from June 2025.”

“This improvement reflects Norman Regional’s position of improved liquidity and 100% compliance with all our debt service requirements,” a statement from the system added.

In October, Moody’s Ratings ended its review of the authority in the wake of the payment default by downgrading its revenue bond rating a notch to Caa3, confirming a Caa2 issuer rating, and revising the outlook to stable from negative.

While a Sept. 4 bond trustee disclosure notice called the Sept. 1 nonpayment an event of default, it noted a short-term forbearance was granted for the payment at the direction of majority bondholders.

The health system, which provides services at multiple campuses in south central Oklahoma, had $247.45 million of outstanding bonds from the three previous issues as of June 30, 2025, according to its latest annual report.