Mayo Clinic to issue $750 million of bonds

Mayo Clinic plans to issue $750 million of bonds in early to mid-April, Mayo CFO Dennis Dahlen told The Bond Buyer.

The plans are part of a multi-year programmatic debt financing for long-term projects, and are subject to change based on market conditions, Dahlen said.

Mayo, based in Rochester, Minnesota, is a nonprofit healthcare system known for medical research and care at its historic home in Minnesota and in Arizona and Florida.

As of Monday, Mayo hoped to issue a mix of 30-year notes and some intermediate-term debt ? "maybe some puts, maybe some? bullets and other things, let's just say in the seven to 15-year range," Dahlen said.

"We all know that there's an inflection point in the mid-range," he said. "The use of the funds is to finance long-term capital. And so we kind of like to match the tenor of the bonds with the asset lives? But we have to be cognizant of current market conditions."

The proceeds will fund campus modernizations and expansions in Rochester as part of the system's multibillion-dollar "Bold. Forward. Unbound." initiative.

The clinic has previously sold tax-exempt bonds using the city of Rochester as a conduit for Minnesota projects.

Dahlen said a total of almost $5 billion in construction is scheduled to wrap up on Mayo's Rochester campus between now and 2030.

"Actually, our campus today is a very large construction site," he said. "As the demo is largely completed, we're starting to put steel and concrete in the ground."

The Rochester part of the initiative involves five new structures with built-in digital capabilities, according to Mayo's website.

The nearly $2 billion Phoenix campus expansion will include 1.2 million square feet of space with modernized technology.

The $750 million of bonds will fund a combination of Bold. Forward. Unbound. projects on those two campuses, Dahlen said.

"We are investing in buildings that will transform healthcare," he said. "The buildings and the automation that is going into them are transformative. They become part of the care team. There's ambient listening, ambient watching ? there are just amazing elements to these buildings."

BofA Securities, Inc., will be senior manager for the deal, with Barclays Capital and JPMorgan Securities as co-managing underwriters, according to a posting on the Municipal Securities Rulemaking Board's EMMA website.

Dahlen declined to name the bond counsel and municipal advisor for the deal, but said, "We've got a pretty well-established team. And rather than change out folks, we're going with partners we've used before."

Moody's Ratings assigns an underlying long term rating of Aa2 to the Mayo Clinic's revenue bonds, and S&P Global Ratings rates them AA. Both assign stable outlooks.