Long-Term Care Bonds Poor Investment Risk - Brief Article - Statistical Data Included

Healthcare Financial Management, June, 2000

Municipal bond debt generally is regarded as low risk, but healthcare bonds deviate from this trend. The long-term care component of the healthcare sector has been especially risky, accounting for almost 75 percent of healthcare bond defaults between 1979 and 1986, according to a report by Fitch IBCA, New York, New York.

In light of the default rate, Fitch IBCA has revised its ratings guidelines for assisted living and nursing homes. For nursing homes, the expected rating range is B- to BBB with an average investment-grade rating of BBB. For continuing care retirement communities, the expected rating range is BB- to A with an average investment grade rating of BBB .