2008-10-10 22:13:00 -
- Fitch Ratings has assigned 'AAA/F1+' ratings to the Indiana Finance Authority's health system revenue refunding bonds, series 2008 (Sisters of St. Francis Health Services, Inc. Obligated Group) consisting of the following:
--$75,000,000 series 2008D;
--$50,000,000 series 2008E;
--$45,200,000 series 2008F;
--$45,250,000 series 2008G;
--$63,895,000 series 2008H.
In addition, Fitch has assigned 'AA' underlying
ratings to the series 2008D-H bonds. Fitch has also affirmed the 'AA' long-term ratings on approximately $833 million of long term debt for Sisters of St. Francis Health Services, Inc. Obligated Group.
The rating is based on the rating of the banks providing the direct-pay letters of credit (LOCs) and the application of Fitch's joint probability methodology. The long-term 'AAA' rating assigned to each series of the Bonds is based jointly on the underlying rating assigned to the Sisters of St. Francis Health Services, Inc. and the support provided by the following banks (all currently rated 'AA-/F1+' by Fitch)that have issued irrevocable direct-pay LOCs for the respective series of the Bonds:
--Bank of America, N.A. - series 2008D & E;
--Bank of New York Mellon - series 2008F & G;
--JPMorgan Chase Bank, N.A. - series 2008H.
(Each of the above named banks a "Bank") The short-term 'F1+' rating is based solely on the respective LOCs. For more information on the underlying credit please refer to the press release published on Aug 7 2008.
The long-term 'AAA' rating is based on Fitch's methodology which considers the joint probability 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 issuer 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; Fitch has determined a low degree of correlation between Sisters of St. Francis Health Services, Inc. and the Banks which results in an 'AAA' rating. If either the Sisters of St. Francis Health Services, Inc. or a Bank were downgraded to 'A-' or lower, the joint probability could no longer be applied and the long-term rating for the respective series of bonds would then reflect the higher of the two ratings.
The Banks are obligated to make payments of principal of and interest on the Bonds upon maturity and redemption, as well as the purchase price for tendered bonds. . The LOC provides full coverage of principal plus an amount equal to: 45 days' interest for the Bank of America, N.A. LOCs; 35 days for The Bank of New York Mellon LOCs and 40 days for the JPMorgan Chase Bank, N.A. LOC in each case, at a maximum rate of 12% based on a year of 365 days and purchase price for tendered Bonds. The ratings on each series of the Bonds will expire upon the earliest of: (a) Oct. 7, 2011, the initial stated expiration date of the respective LOC, unless such date is extended; (b) upon any prior termination of the respective LOC; or (c) upon defeasance of the respective series of the Bonds. The underwriter for the series 2008E, F and G bonds is Merrill Lynch & Co. and the underwriter for the series 2008D and H bonds is Citigroup Global Markets Inc. The Bonds are expected to be delivered on or about Oct. 10, 2008.
The Bonds initially bear interest at a weekly rate mode, but may be converted to a daily, long term, short term (made up of individual bond interest terms) or ARS rate mode. While the bonds bear interest in the weekly rate mode, interest payments will be made on the first business of each month, commencing Nov. 3, 2008. Holders may tender their bonds on any business day, provided the tender agent, trustee and remarketing agent is given at least seven calendar days' prior notice of the purchase.
Each series of the Bonds are subject to mandatory tender: (1) on a conversion date; (2) on the fifth business day preceding any expiration or termination of a Credit or Liquidity Facility without replacement by an alternate Credit of Liquidity Facility or upon termination of the Liquidity Facility as a result of a Mandatory Standby Tender; (3) on the date of replacement of the Credit or Liquidity Facility; (4) on any business day designated by Sisters of St. Francis Health Services Inc. and (5) on fourth day after the Trustee's receipt from the Credit Facility Provider that an Event of Default under the Reimbursement Agreement has occurred or that the interest component of the respective LOC will not be reinstated and a written request requiring all Bonds be tendered for purchase. Optional and mandatory redemptions provisions also apply to the bonds.
Bond proceeds will be to (i) finance or reimburse the costs of acquiring, constructing, renovating and equipping healthcare and related facilities owned by Sisters of St. Francis Health Services, Inc, (ii) refund the Indiana Health Facility Financing Authority's Health System Revenue Bonds, Series 2003A-D (Sisters of St. Francis Health Services, Inc Obligated Group) and (iii) pay costs of issuance.
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.
Fitch Ratings
Ronald P. McGovern, +1-212-908-0513
(the bonds, New York)
Jim LeBuhn, +1-312-368-2059
(the underlying bond rating, Chicago)
Cindy Stoller, +1-212-908-0526
(Media Relations, New York)
