Diakon completes successful bond sale; critical for capital projects, charitable care

Middletown, Pa. (Friday July 8, 2016)

Diakon Lutheran Social Ministries recently successfully completed its planned bond sale, creating a more conservative debt profile by issuing fixed-rate debt, retiring some of its previously outstanding variable rate debt, and eliminating some risks associated with previously executed interest-rate swap arrangements.

The sale followed an earlier BBB, outlook stable, ratings by Fitch Ratings of New York.

“With overall market rates cooperating and investors’ interest very strong,” says Scott Habecker, Diakon’s chief financial and chief operating officer, who coordinated the bond issuance, “we were able to complete the deal at near-record low borrowing costs. The impact of those lower rates allowed us to terminate some costly interest-rate swap arrangements that remained outstanding from prior issuances of bonds, issue additional fixed-rate debt with a higher level of predictability and gain additional debt service-related savings.”

Such savings translate, he adds, into a financially stronger organization that can undertake the capital projects necessary to remain a market leader in senior living services, while also providing a significant level of charitable care.

Borrowings from the bond issue will total approximately $34.8 million, lower than expected because of favorable declines in interest rates before bond pricing on the day of issuance.

“Our ability as an organization and management team to execute on a number of previously publicized key initiatives and create positive trends were critical in receiving a very positive credit rating report from Fitch Ratings and in developing strong investor interest,” Habecker says. “In fact, investor orders for the bonds far outweighed the amount we wished to borrow,” allowing the underwriting team, led by Wells Fargo, to execute the deal in an efficient and cost-effective manner.


For further information, please contact:
William Swanger, M.A., APR
Senior Vice President, Corporate Communications
Diakon Lutheran Social Ministries
(717) 795-0308
E-mail: swangerb@diakon.org