Senior care provides an essential service in this country, more so than ever, and Cain Brothers (a division of KeyBanc Capital Markets) served as sole manager for a series of “social” bonds provided to a California not-for-profit senior care company. These social bonds, contracted with a public authority and supporting projects with positive social outcomes, total $39.68 million. They are tax-exempt, come with a fixed interest rate and were issued through the California Health Facilities Financing Authority.
The borrower was California-based On Lok, a not-for-profit, public benefit corporation that serves over 1,600 frail and low-income seniors in the Bay Area. Founded in 1971, On Lok was an original pioneer of the PACE model of care, which is a specialized Medicare/Medicaid managed care plan allowing seniors to receive care at home or in community-based settings. The company is currently the sixth largest PACE program provider in the country and second-largest in California.
Proceeds of the social bonds will refund prior variable-rate bank debt and also fund approximately $20 million of various capital improvement projects at On Lok’s existing facilities. The transaction eliminates both interest rate and bank renewal risk for On Lok, and Cain Brothers helped the provider secure a new credit rating of “A” with a stable outlook from Fitch, making On Look the only rated PACE provider in the country. Cain Brothers secured a 3.08% yield to call on the 35-year final maturity term bond.
