GZO Spital Wetzikon is facing a financial crisis as it struggles to repay its bonds next Wednesday. The hospital received temporary creditor protection in early May after failing to repay a bond of 170 million francs, which has put the hospital at risk of a chain reaction of financial troubles.
The hospital borrowed the funds ten years ago for a new building project that remains unfinished. The general contractor terminated the contract after the hospital’s debt restructuring moratorium was announced. Now, both the hospital and the contractor are facing financial challenges as a result of this situation.
The uncertainty surrounding the repayment of the hospital’s bonds has led to the price of the bond dropping below 40 percent. This financial strain is not unique to GZO Spital Wetzikon, as other hospitals such as See-Spital in Horgen and Männedorf Hospital are also grappling with high debts and low profitability.
The lack of support from the government council of Zurich for GZO Wetzikon has sent a worrying signal to investors. If concessions are made to creditors, it could have serious implications for other hospitals and institutions that rely on implicit guarantees from cantons or municipalities.
Investors are now reevaluating their investments in healthcare facilities, with many hospitals being viewed with suspicion due to the financial uncertainties in the sector. The market is reacting to these uncertainties by lowering returns on hospital bonds than what they actually have.
Local politics could further exacerbate the situation by making economically suboptimal decisions that could harm hospitals and creditors. The potential repercussions of these decisions could impact the broader market and lead to further financial instability in the healthcare sector.
