$82.525 MILLION OF DEBT AFFECTED. AFFIRMATION IN CONNECTION WITH THE SUBSTITUTION OF THE LOC. SUBSTITUTE LOC PROVIDED BY US BANK NATIONAL ASSOCIATION.
Louisiana Public Facilities Authority
NEW YORK, Feb 16, 2011 -- Moody's Investors Service has affirmed the Aa1/VMIG 1 rating for the
Louisiana Public Facilities Authority Variable Rate Hospital Revenue Refunding
Bonds (Franciscan Missionaries of Our Lady Health System Project), Series 2005D
The affirmation is in conjunction with the delivery of a substitute, irrevocable
direct-pay letter of credit (LOC) provided by U.S. Bank National Association
(the Bank) in replacement of the letter of credit provided by JPMorgan Chase
Bank, N.A. The effective date of the substitution is scheduled for February 16,
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 US Bank National Association as provider of
the letter of credit; the underlying rating of 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 of the Bonds is based upon
the short-term rating of the Bank as provider of the letter of credit.
U.S. Bank National Association is currently rated Aa2 for long-term other senior
obligations (OSO) and Prime-1 for short-term OSO. Moody's maintains A2
underlying rating on the Bonds.
Since a loss to investors would occur if both the Bank and
Franciscan Missionaries of Our Lady Health System (the Borrower) default in
payment, Moody's has assigned the long-term portion of the rating 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 for the Bonds.
Interest Rate Modes And Payment
The Bonds will continue to bear interest in a daily rate mode and pay interest
on the first business day of each month. While the Bonds bear interest in the
weekly rate mode, interest is also paid on the first business day of each month.
The trust indenture permits conversion of the Bonds, in whole or in part, to a
weekly, long-term or auction rate mode. Upon conversion, the Bonds will be
subject to mandatory tender (except between daily and weekly rate modes).
Moody's short-term and JDA ratings apply to Bonds while they bear interest in
the weekly and daily rate modes.
The trust indenture does not permit the issuance of additional bonds.
Flow Of Funds
The trustee is instructed to draw under the letter of credit in accordance with
its terms in order to make timely payment of principal and interest. If the Bank
fails to honor a draw under the letter of credit, the trustee is directed to
utilize monies from the Borrower. The trustee is also instructed to draw under
the letter of credit for purchase price on each purchase date to the extent
remarketing proceeds 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 plus 34 days of interest at the
maximum rate applicable to the Bonds (12%) and will provide coverage for Bonds
while they bear interest in the weekly and daily rate modes. The letter of
credit provided is subject to the International Standby Practices (ISP98).
Draws On The Letter Of Credit
Conforming draws for principal and interest presented to the Bank at or before
1:30 p.m. New York City time, on a business day will be honored by the Bank by
12:00 p.m. New York City time, on the following business day. Conforming draws
for purchase price presented to the Bank at or before 12:30 p.m. New York City
time, on a business day will be honored by the Bank by 2:30 p.m. New York City
time, on such business day.
Reinstatement Of Interest Draws
Draws made under the letter of credit for interest shall reinstate
immediately upon the honoring of an interest drawing.
Reimbursement Agreement Defaults
Upon an event of default under the reimbursement agreement, the Bank may send
notice stating there has been an event of default under the reimbursement
agreement, direct the trustee to tender or accelerate the Bonds, and state that
the letter of credit will terminate 25 days following the trustee's receipt of
such notice. With direction to tender, the Bonds will be subject to mandatory
tender at least 20 days following the trustee's receipt of such notice and in no
event later than the business day preceding the termination date of the letter
of credit. With direction to accelerate, the trustee shall declare the Bonds
immediately due and payable (at which time interest will cease to accrue) and
immediately draw on the letter of credit.
Expiration / Termination Of The Letter Of Credit
The letter of credit will terminate upon the earliest to occur of: (i) February
16, 2016, the stated expiration date of the letter of credit; (ii) the business
day following the date all bonds are converted to a rate mode other than the
weekly or daily rate mode; (iii) the date the Bank receives notice that: (a) no
bonds remain outstanding, (b) all drawings required to be made under the
indenture and available under the letter of credit have been made and
honored, or (c) an effective alternate letter of credit has been issued to
replace the existing letter of credit; (iv) the date an acceleration draw is
honored; (v) 25 days following the trustee's receipt of notice from the Bank
stating an event of default has occurred under the reimbursement and directing
either a mandatory tender or acceleration of the Bonds; and (vi) the date a
final maturity drawing is honored by the Bank and the available commitment is
reduced to zero.
Substitution of the Letter of Credit
The Bonds will be subject to mandatory tender on the effective date of an
alternate letter of credit. 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 may not be surrendered to the Bank for cancellation
until such tender draw has been honored.
Bondholders may optionally tender their Bonds, while in the daily rate mode, on
any business day with notice delivered to the tender agent by 11:00 a.m. Eastern
Time. Bondholders may optionally tender their Bonds, while in the weekly rate
mode, on any business day, with notice delivered to the tender agent
seven calendar days prior to the tender date.
The Bonds will be subject to mandatory tender on the following dates: (i) the
business day following the last day of the flexible rate period or term rate
period, (ii) each interest rate conversion date (except between the weekly and
daily rate modes), (iii) the letter of credit substitution date, (iv) five
business days preceding the expiration date of the letter of credit, (v) not
later than the business day preceding the termination date of the letter of
credit in conjunction with the occurrence of an event of default under the
reimbursement agreement and direction to tender the Bonds, (vi) for Bonds in the
daily or weekly rate mode, any business day specified by the Bank that is not
less than twenty days following the trustee's receipt of notice from Bank
stating that an event of default has occurred under the indenture with direction
to cause a mandatory tender, or (vii) for Bonds bearing interest at a daily or
weekly rate, any business day specified by the borrower not less than 20 days
after the trustee's receipt of such notice of mandatory tender. With respect to
(vi), the LOC requires the Bank to set the mandatory tender date not less than
one business day prior to the termination date.
The Bonds are subject to mandatory sinking fund redemptions.
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 underlying rating was upgraded.
What Could Change the Rating-Down
Long-Term: the long-term rating on the Bonds could be lowered if the long term
OSO rating of the Bank or the long-term underlying rating was downgraded or if
the default dependence increased.
Short-Term: the short-term rating on the Bonds could be lowered if the
short-term OSO rating on the Bank was downgraded.
Trustee: The Bank of New York Mellon Trust Company, N.A.
Remarketing Agent: J.P. Morgan Securities Inc.
The principal methodologies used in this rating were Moody's Rating
Methodology for Letter of Credit Supported Transactions published in August
2005, and Applying Global Joint Default Analysis to Letter of Credit
Backed Transactions in the U.S. Public Finance Sector published in October 2010.
The last rating action was on September 21, 2010 when the long-term rating was
lowered to Aa1 from Aaa (on watch for downgrade).
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
Michael J. Loughlin
Senior Credit Officer
Public Finance Group
Moody's Investors Service
Journalists: (212) 553-0376
Research Clients: (212) 553-1653
MOODY'S AFFIRMS THE Aa1/VMIG 1 LETTER OF CREDIT BACKED RATING FOR LOUISIANA PUBLIC FACILITIES AUTHORITY VARIABLE RATE HOSPITAL REVENUE REFUNDING BONDS, (FRANCISCAN MISSIONARIES OF OUR LADY HEALTH SYSTEM PROJECT), SERIES 2005D
Moody's Investors Service
250 Greenwich Street
New York, NY 10007