Fitch Rates Maine's Health and Higher Educational Facilities Authority $68.4MM 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 $68.4 million Maine Health and Higher Educational Facilities Authority (HHEFA) revenue bonds, series 2006H. The bonds, which will bear interest at an auction rate, are scheduled to price on December 20 via negotiation led by Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. & Co. In addition, Fitch affirms its 'AA' ratings on approximately $1.3 billion of Maine HHEFA's outstanding reserve fund resolution bonds. The Rating Outlook is Stable. Bond proceeds from series 2006H will be loaned to Mercy Hospital Mercy Hospital or Mercy Medical Center could refer to the following hospitals in:
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 67 borrowers, with moderate single-borrower concentration; the largest, the Maine Health System, represents 16% of the total outstanding portfolio, and the top 10 borrowers account for approximately 64% of the outstanding loan balance. Approximately 55% of the outstanding loan balances are to hospitals, 30% to higher education institutions, 5% to nursing homes, 5% to residential care/assisted living facilities, 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 ten, Fitch estimates that two would be rated in the 'AA' category, five in the 'A' category, two 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 $121.7 million, or 9% 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 $24 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 $145.7 million, or approximately 11% 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 32% 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. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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