$75 MILLION OF DEBT AFFECTED. LONG TERM JDA RATING BASED ON LONG-TERM RATINGS OF BANK OF AMERICA, N.A. AS LOC PROVIDER AND SWEDISH HEALTH SERVICES
Washington Health Care Facilities Auth
NEW YORK, Dec 1, 2010 -- Moody's Investors Service affirms the Aa1/VMIG 1 rating of The Washington Health
Care Facilities Authority Revenue Bonds, Series 2009C, Swedish Health Services
(the Bonds) in connection with the issuance of a substitute letter of credit,
scheduled for December 1, 2010. The current letter of credit provided by U.S.
Bank National Association is being replaced with a new letter of credit provided
by Bank of America, N.A. (the Bank).
The long term rating is based on a joint default analysis (JDA) which reflects
Moody's approach to rating jointly supported transactions. The JDA rating is
based upon the long-term rating of the Bank as provider of the letter of credit;
the underlying rating assigned to the Bonds; and the structure and legal
protections of the transaction which ensures timely debt service payments to
investors. The timely payment of purchase price is reflected in the short-term
rating of the Bonds. The short term rating is based on the short term rating of
the Bank. The Bank is currently rated Aa3/ P-1. Moody's currently maintains an
underlying rating of A2 on the Bonds.
Since a loss to investors would occur only if both the Bank providing the letter
of credit and Swedish Health Services (the Borrower) default in payment, Moody's
has assigned ratings based upon the joint probability of default by both
parties. In determining the joint probability of default, Moody's considers the
level of default dependence between the Bank and the Borrower. Moody's has
determined that there is a low level of default dependence between the Bank and
the Borrower. As a result, the joint probability of default for the Bank and
the Borrower results in a credit risk consistent with a JDA rating of Aa1.
Interest Rate Modes
The Bonds are currently in the weekly mode. The Bonds may be converted in whole,
to a daily or long term rate mode. The weekly rate pays interest on the first
Wednesday of each month and the daily rate pays interest on the fifth business
day of each month. The letter of credit will provide sufficient coverage for the
Bonds while they bear interest in the weekly and daily modes. Moody's JDA
rating will not extend to the Bonds while they bear interest in the long
Flow of Funds
The trustee is instructed to draw under the letter of credit for principal and
interest on the business day prior to each interest payment date, redemption
date or maturity date. In the event the Bank fails to deposit such moneys by the
time required, the trustee shall utilize funds of the Borrower to make such
payments to bondholders. The trustee is instructed to draw under the letter of
credit, on each purchase date, for purchase price, to the extent
remarketing proceeds received are insufficient. Bonds which are purchased by the
Bank due to a failed remarketing are held by the trustee and will not be
released until the trustee has received written confirmation from the Bank
stating that the letter of credit has been reinstated in the amount of the
purchase price drawn for such Bonds.
Letter of Credit
The letter of credit is sized for full principal of the Bonds plus 45 days of
interest at the maximum rate applicable to the Bonds (12%) and will provide
coverage for the Bonds while they bear interest in the weekly and daily rate
Draws on the Letter of Credit
Conforming draws for principal or interest presented to the Bank at or before
2:30 p.m., New York Time, on a business day, will be honored by the Bank on or
before 1:00 p.m. on the next business day. Conforming draws for purchase price
presented to the Bank at or before 12:30 p.m., New York Time, on a business day,
will be honored by the Bank on or before 2:30 p.m. on the same business day.
Reinstatement of Interest Draws
Draws made under the letter of credit for interest shall be
automatically reinstated on the sixth day following such drawing unless the
trustee receives a notice by the close of business on the fifth day stating
that an event of default under the reimbursement agreement has occurred
and directing acceleration of the Bonds. Upon receipt of such notice, the Bonds
shall be subject to immediate acceleration and interest shall cease to accrue
Reimbursement Agreement Defaults
The Bank may send a notice of event of default under the reimbursement agreement
directing either a mandatory tender or acceleration of the Bonds. Upon receipt
of notice directing mandatory tender, the Bonds shall be subject to purchase on
the fifth business day following receipt of such notice. Upon receipt of notice
directing acceleration, the Bonds shall be subject to immediate acceleration and
interest shall cease to accrue upon declaration. The letter of credit shall
expire on the 25th day following the trustee's receipt of such notice.
Expiration/Termination of the Letter of Credit
The letter of credit will terminate upon the earliest to occur of: (1) November
30, 2015 (the stated expiration date of the letter of credit); (2) the fifth
business day following receipt by the Bank of notice from the trustee stating
that a substitute letter of credit has been accepted; (3) the fifth business day
following conversion of all of the bonds to an interest rate mode other than
weekly or daily; (4) the 25th day following receipt by the trustee of notice
from the Bank that an event of default under the reimbursement agreement has
occurred directing mandatory tender or acceleration of the bonds; and (5) the
honoring of the final draw.
The bonds are subject to mandatory tender on the effective date of an alternate
credit facility. Draws for purchase price upon the substitution of the letter of
credit will be made under the existing letter of credit and the existing letter
of credit will not be surrendered to the Bank for cancellation until such tender
draw has been honored.
The bonds are subject to optional tender in the weekly rate mode on any business
day with seven days notice to the tender agent and during the daily rate mode on
any business day with notice by 11:00 a.m., NY time.
The bonds are subject to mandatory tender; (i) on each interest rate conversion
date; (ii) at the end of each term rate period; (iii) on the effective date of a
substitute letter of credit; (iv) on the fifth business day prior to the
expiration date of the letter of credit; and (v) on the fifth business day
following receipt of notice by the trustee from the Bank of an event of default
under the reimbursement agreement directing mandatory tender.
What Could Change the Rating-Up
Long-Term: the long-term rating on the Bonds could be upgraded if the long-term
OSO rating of the Bank or the long-term rating of the Borrower were upgraded.
What Could Change the Rating-Down
Long-Term: the long-term rating on the Bonds could be downgraded if the
long-term OSO rating of the Bank or the long-term rating of the Borrower was
downgraded, or if there was an increase in the level of default dependence
between the letter of credit Bank and the Borrower.
Short-Term: the short-term rating on the Bonds could be lowered if the
short-term OSO rating of the Bank were downgraded.
Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.
Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.
Public Finance Group
Moody's Investors Service
Senior Credit Officer
Public Finance Group
Moody's Investors Service
Journalists: (212) 553-0376
Research Clients: (212) 553-1653
MOODY'S AFFIRMS Aa1/VMIG 1 LETTER OF CREDIT-BACKED RATING OF THE WASHINGTON HEALTH CARE FACILITIES AUTHORITY REVENUE BONDS, SERIES 2009C, SWEDISH HEALTH SERVICES
Moody's Investors Service
250 Greenwich Street
New York, NY 10007