University Hospital will be reissuing $80 million in bonds after turmoil in the financial markets earlier this year caused it to buy back the $80 million it issued in 2006.

University Health Services Inc., the hospital's operating company, and Richmond County Hospital Authority, which leases the hospital to the operating company, voted Thursday to approve the move. Other University governing boards are expected to take up the issue next month.

University originally issued variable rate bonds backed by bond insurance from Ambac Financial Group. But with the turmoil in the financial markets, Ambac has been steadily downgraded and the interest University had to pay on the bonds began to rise, said Chief Financial Officer Dave Belkoski. There are a lot of factors having an impact on the credit crunch and why bond insurers are being downgraded, from the subprime mortgage crisis to the bailout of Bear Stearns investment bank, he said.

"It is just rippling effects," Mr. Belkoski said. University had prepaid for 30 years of bond insurance with Ambac and had been trying to stick with the company but it was downgraded again in mid-June, he said.

"That's when the decision was made to drop Ambac altogether," Mr. Belkoski said. "Then it finally got to the point where it was going to cost us more by hanging on than letting them go."

Instead, University will reissue variable rate bonds backed by a letter of credit from SunTrust Bank.

While it means eating about $2 million in costs from the 2006 issue, University will get a rate of about 2.9 percent on its bonds instead of the 4 percent it was facing, Mr. Belkoski said. Overall, it will save about $1.1 million a year and should make up the costs within a couple of years, he said.

The bond issue is the primary way University is funding a massive $94 million renovation. That renovation is scheduled to wrap up in April, said Kyle Howell, vice president for support and facilities services.