Fitch Rates Maine Health & Higher Educational Facilities Authority's Revs 'AA'; Outlook Stable.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. has assigned an 'AA' rating to the $90 million Maine Health and Higher Educational Facilities Authority (the authority) revenue bonds, series 2009A. In addition, Fitch affirms its rating on approximately $1.4 billion of the authority's outstanding reserve fund resolution bonds at 'AA'. The series 2009A bonds are scheduled to price via negotiation during the week of Nov. 16, 2009. Bond proceeds will be used to fund or refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. loans to four nonprofit A corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive. Nonprofits are also called not-for-profit corporations. Nonprofit corporations are created according to state law. educational, medical and rehabilitation rehabilitation: see physical therapy. institutions in Maine. The Rating Outlook is Stable. The 'AA' rating and Stable Outlook reflect the diversity, low credit risk, and security of loans within the authority's 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 mechanism additionally backing loan repayments, and a sizable supplemental operating fund. Most 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 the authority as their primary borrowing vehicle because it offers participants the lowest cost of capital. The authority's loan pool consists of 66 borrowers, with moderate single-borrower concentration; the largest, the Maine Health System, represents 15% of the total outstanding portfolio, and the top 10 borrowers account for approximately 63% of the outstanding loan balance. Approximately 43% of the outstanding loan balances are to hospitals; 13% to higher education institutions; with the remaining 44% outstanding loans spread among mental health facilities, nursing homes, community care retirement communities and social service organizations. Borrowers in the pool generally do not have public ratings. Among the largest eight borrowers, Fitch estimates that one would be rated in the 'AA' category, three in the 'A' category, and four in the 'BBB' 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. After this issue, the debt service reserve will total $118.3 million, or 9% of total bond principal outstanding. The debt service reserve is also backed by a state moral obligation make-up provision 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 been utilized. The reserves are invested in highly rated tax-exempt municipal bonds, money market accounts and investment agreements. The operating fund balance, while not pledged, totals approximately $38 million and may be used instead of the debt service reserve, in the event of loan delinquencies. The operating fund, which is primarily invested in U.S. treasury U.S. Treasury Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S. or agency securities, has grown steadily from administrative fees collected from borrowers. Combined, debt service reserves and operating fund balances will total $156.3 million, or approximately 12% of bond principal outstanding. Fitch analyzes the default tolerance of the authority's portfolio using a stress test that considers loan credit quality, single-risk concentration, debt service reserves and operating funds and loan payments. Fitch discounts in its analysis approximately $15.3 million of reserves that are held in non-collateralized investment agreements with providers rated below 'AA'. However, the authority's reserves and operating funds are sufficient to pay bondholders if scheduled loan repayments fall short by as much as 30% for four consecutive years, even if the lower quality investment agreements fail to perform and no action is taken by the state 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 fund. 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