Fitch Rates Maine's HHEFA $119MM Revs 'AA'.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. assigns 'AA' ratings to $105 million series 2006F and $14 million series 2006G Maine Health and Higher Educational Facilities Authority (HHEFA) revenue bonds. Bond proceeds will be used to fund loans to six hospitals, four colleges, and two assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. facilities and one nursing home. The series 2006F fixed-rate bonds are scheduled to price during the week of August 14, 2006 via negotiation led by Morgan Stanley  To comply with Wikipedia's , the introduction of this article needs a complete rewrite. . The series 2006G auction rate bonds are scheduled to price on Sept. 6, 2006 via negotiation led by Morgan Stanley. Fitch also affirms its 'AA' ratings on approximately $1.3 billion of Maine HHEFA's outstanding reserve fund resolution bonds. The Rating Outlook is Stable. The 'AA' rating and Stable Rating Outlook reflect the diversity, low credit risk, and security on loans within the Maine HHEFA loan pool, a debt service reserve funded at maximum annual debt service (MADS) and backed by the state's moral obligation, a state-aid intercept intercept in mathematical terms the points at which a curve cuts the two axes of a graph. mechanism to assure loan repayments, and a supplemental operating fund that can be utilized so any delinquent loan payments do not cause a draw on the debt service reserve. Virtually all of the state's eligible health care and higher education higher education Study beyond the level of secondary education. Institutions of higher education include not only colleges and universities but also professional schools in such fields as law, theology, medicine, business, music, and art. institutions use Maine HHEFA as their primary borrowing vehicle because it offers participants the lowest cost of capital. Maine HHEFA's loan pool consists of 66 borrowers, with moderate single-borrower concentration; the largest, the Maine Health System, represents 18% of the total outstanding portfolio, and the top 10 borrowers account for approximately 65% of the outstanding loan balance. Approximately 54% of the outstanding loan balances are to hospitals, 29% to higher education institutions, 4% to nursing homes, 4% to residential care/assisted living facilities, 4% to Continuing Care continuing care a professional convention that a veterinarian who is treating an animal is obliged to continue treating that case unless an arrangement is made with its custodian to transfer the care to another practitioner or to a specialist. retirement communities, and 5% to other community mental health centers, clinics, and social service facilities. Most of the borrowers in the pool do not have public ratings. However, among the top 10, Fitch estimates that two would be rated in the 'AA' category, four in the 'A' category, three in the 'BBB' category, and one in the 'BB' category. In addition to a senior lien senior lien n. the first security interest (lien or claim) placed upon property at a time before other liens, which are called "junior" liens. (See: mortgage, deed of trust, lien, UCC-1) on gross revenues and a mortgage on most property and/or financed projects, the loans are backed by a state-aid intercept. A debt service reserve for all parity debt is funded by bond proceeds at 100% of MADS. The debt service reserve totals $109 million, or 8% of total bond principal outstanding. The debt service reserve is backed by the state's moral obligation to replenish re·plen·ish v. re·plen·ished, re·plen·ish·ing, re·plen·ish·es v.tr. 1. To fill or make complete again; add a new stock or supply to: replenish the larder. 2. the reserve if it falls below MADS. Neither the intercept nor the reserve replenishment replenishment the addition of an appropriate quantity of properly prepared solution containing the correct concentration of chemicals to the developer solutions used in radiography. has ever needed to be utilized. In addition, Maine HHEFA has built its own equity within the operating fund that can be used in the event of loan delinquencies to avoid a draw on the debt service reserve. Operating fund balances currently total approximately $23 million. Management has an internal goal to grow the fund to $25 million which it expects to achieve in the next two to four years. Combined, debt service reserves and operating fund balances total $132 million, or approximately 10% of bond principal outstanding. Fitch analyzes the default tolerance of Maine HHEFA's portfolio using a stress test that considers credit quality, single-risk concentration, reserve fund size, debt service requirements, and historical default and recovery rates for health care and higher educational facilities. Maine HHEFA's reserves are sufficient to pay bondholders even if scheduled loan repayments fall short by as much as 31.5% for four consecutive years, assuming no action is taken by the state to replenish the reserve fund. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. 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. 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