NEW YORK - (Business Wire) Fitch Ratings upgrades the long- and short-term ratings to 'AA+/F1+' from 'AA-/F1' for the currently outstanding $80,935,000 General Authority of Southcentral Pennsylvania revenue bonds, series 2008D (Wellspan Health Obligated Group). The upgrade is taken in connection with the mandatory tender and remarketing of the bonds upon substitution of the irrevocable, direct-pay letter of credit (LOC) supporting the bonds which will occur on Nov. 4, 2009. The long-term rating assigned to series 2008D is now based jointly on the underlying rating assigned to those bonds by Fitch (currently rated 'AA-'), and the support provided by the substitute LOC issued by TD Bank, NA in replacement for SunTrust Bank. Fitch rates TD Bank, NA 'AA-/F1+' with a Stable Rating Outlook. (For information about the basis of the long-term component of the rating, see the criteria report entitled 'Dual-Party Pay Criteria for Long-Term Ratings on LOC-Supported U.S. Public Finance Bonds' dated June 11, 2009 at 'www.fitchratings.com'.) The short-term 'F1+' rating is based solely on the LOC.
The long-term rating is based on Fitch's dual-party pay criteria 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 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 TD Bank, NA and the obligor which results in a rating of 'AA+/F1+' for the bonds. If either the underlying bond rating or the bank rating were downgraded to 'A-' or lower, the dual-party pay criteria could no longer be applied, and the long-term rating assigned to the bonds would then be adjusted to the higher of the bank rating and the underlying bond rating.
The bank is obligated to make payments of principal of and interest on the bonds upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. The rating will expire upon the earliest of: (a) Nov. 3, 2012, the initial stated expiration date of the LOC, unless such date is extended; (b) any prior termination of the LOC; (c) defeasance of the bonds. The LOC provides full coverage of principal plus an amount equal to 40 days of interest at a maximum rate of 12% based on a year of 365 days and purchase price for tendered bonds, while in the weekly and daily rate modes. The Remarketing Agent for the series 2008D bonds is Citigroup Global Markets Inc.
The bonds bear interest at a weekly rate, but may be converted to a daily, long term, indexed put rate, or bond interest term rate. While bonds bear interest in the weekly rate mode, interest payments are on the first Wednesday of each month. While bonds bear interest in the daily rate mode, interest payments are on the fifth business day of each month. Holders may tender their bonds on any business day, provided the remarketing agent is given at least seven calendar days' prior notice of the purchase in the weekly rate mode, and notice by 9:00 a.m. New York time on the purchase date, in the daily rate mode. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate; (2) upon expiration, substitution or termination of the LOC; and (3) on the fourth business day following receipt of written notice from the bank of an event of default under the Reimbursement Agreement, directing such mandatory tender. Optional and mandatory redemption provisions also apply to the bonds.
Additional information is available at 'www.fitchratings.com'.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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, New York
Joseph Staffa, 212-908-0829
or
Media Relations:
Cindy Stoller, 212-908-0526
Email: cindy.stoller@fitchratings.com
