Case study: NJ hospital refinances bond debt

Want to know how much it costs to bail out of the imploding auction-rate bonds market? For one New Jersey hospital, the price tag was $16 million. The Hackensack Medical Center received permission last week to refinance $147 million in outstanding auction-rate bonds. Pushed up by the panic in the auction-rate market, the bonds had seen interest rates double over one month. To get out from under, Hackensack agreed to pay about $7.1 million in professional fees, and another $9 million in fees to undo a related interest-rate hedging deal.

Hackensack joins a throng of New Jersey borrowers that are working on such deals. Last week, a state agency that organizes loans for hospitals and colleges approved plans to speed up refinancing deals for $1 billion in auction-rate bonds.

To learn more about the New Jersey bond situation:
- read this piece from The Star-Ledger

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