Rating agency representatives and bondholders need to adjust ratios and covenants to respond to new proposed debt classifications.
The new proposed ruling is intended to simplify how debt is classified on the balance sheet. The debt most impacted by this proposed change is variable rate debt obligation (VRDO), and will no longer be classed as long-term debt.
"People look at your company different when you all of a sudden have an extra $75 million in short-term liability," said Jared Grant, senior director of financial reporting for St. Luke's Health System in Boise, Idaho.