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Fitch Rates Allen Cnty (Ohio) Adj Rate Hosp Fac Rev Bds (Catholic Healthcare Partners)
NEW YORK-(Business Wire)-May 6, 2008 - Fitch Ratings assigns a rating of 'AAA/F1+' to $125,000,000 County of Allen (Ohio) adjustable rate hospital facilities revenue bonds, series 2008A (Catholic Healthcare Partners), and a rating of 'AA+/F1+' to the following County of Allen (Ohio) adjustable rate hospital facilities revenue bonds: $75,000,000 series 2008B; $37,500,000 series 2008C; $32,500,000 series 2008D; and $30,000,000 series 2008E. The long-term ratings are each based jointly on Catholic Healthcare Partners (the obligor, currently rated 'AA-' by Fitch) and the support provided by the separate irrevocable, direct-pay letters of credit (LOC) securing each series of bonds, as follows: Bank of America, N.A. (currently rated 'AA/F1+', on Rating Watch Negative, by Fitch) for the series 2008A bonds; JPMorgan Chase Bank, N.A. (currently rated 'AA-/F1+ by Fitch) for the series 2008B bonds; and Wachovia Bank, N.A. (currently rated 'AA-/F1+' by Fitch) for the series 2008C, D and E bonds. The short-term 'F1+' ratings are based solely on the LOCs.
The long-term ratings are based on Fitch's methodology which considers the likelihood of the failure of both a rated obligor and a bank LOC provider. The methodology results in a rating that is up to two notches higher than the stronger of the two credits if the following conditions are met: (1) both entities have a rating of 'A' or higher; (2) the transaction is structured such that payments from both the municipal obligor and the bank are in the flow of funds and both entities would have to fail to perform before the bonds defaulted; and (3) the credit of the bank and the rated obligor have no more than a medium degree of correlation. In this instance, there is a low degree of correlation. If either of the obligor or any bank were to be downgraded to below 'A', this methodology would no longer be applicable to the related series of bonds and the rating would be revised to reflect the higher of the rating assigned to the bank or the rating assigned to the Obligor.
The banks are obligated to make payments of principal and interest when due as well as purchase price for tendered bonds during the daily and weekly interest rate modes. The rating for any series of bonds will expire upon the earliest of: May 13, 2011, the initial expiration date of the LOC, unless such date is extended; any prior termination of the LOC; or defeasance of the bonds. The LOCs provide full coverage of principal plus an amount equal to 50 days' interest at a maximum rate of 12% based on a 365-day year, and purchase price for tendered bonds. The remarketing agent for the series 2008A and D bonds is Banc of America Securities, LLC. The remarketing agent for the series 2008B and C bonds is J. P. Morgan Securities, Inc. The remarketing agent for the series 2008E bonds is Fifth Third Securities, Inc. The bonds are expected to be available for delivery on or about May 13, 2008.
The series 2008A, B and C bonds will initially bear interest at the daily rate. The series 2008D and E bonds will initially bear interest in the weekly interest rate mode. Any series of bonds may be converted to a daily, weekly, commercial paper, SIFMA floater, LIBOR-based short-term, long-term or fixed interest rate mode. While in the daily mode, interest will be payable on the first business day of each month, commencing June 2, 2008. While in the weekly mode, interest will be paid on the first Wednesday of each month, commencing June 4, 2008. While the bonds are in the daily and weekly rate modes, bondholders may tender bonds on any business day, with requisite prior notice. The bonds are subject to mandatory tender (i) on each interest rate conversion date; (ii) on the day following the end of each commercial paper period; and (iii) upon the expiration, non-reinstatement, termination or substitution of the LOC. Optional and mandatory redemption provisions also apply to the bonds.
Bond proceeds will be used to refinance outstanding debt of the obligor.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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