$50.375 MILLION OF DEBT AFFECTED. SUBSTITUTE LETTER OF CREDIT PROVIDED BY U.S. BANK, NATIONAL ASSOCATION.
Aurora (City of) CO
NEW YORK, Sep 15, 2010 -- Moody's has downgraded the long-term rating to Aa1 (on watch for possible
downgrade) from Aaa and affirmed the VMIG 1 short-term rating of the City of
Aurora, Colorado Hospital Revenue Refunding Bonds (The Children's Hospital
Association Project) Series 2008B (the Bonds) in conjunction with the
substitution of the letter of credit currently provided by Allied Irish Bank,
p.l.c. for a letter of credit to be provided by U.S. Bank, National Association
(the Bank) scheduled for September 15, 2010.
Upon the substitution, the rating will be based upon (i) the letter of credit
provided by U.S. Bank, National Association, (ii) the structural and legal
protections of the transaction which ensures timely payment of debt service and
purchase price to bondholders, (iii) Moody's evaluation of the credit quality of
Moody's currently rates the Bank Aa1 (on watch for possible downgrade) for its
long-term obligations and P-1 for its short-term obligations.
Description of the Bonds
The Bonds will continue to bear interest at a weekly rate which pays interest on
the first business day of each month. The interest rate on the Bonds may be
converted, in whole or in part, to daily, term, fixed, flexible or libor-indexed
rate modes. Upon conversion, the Bonds will be subject to mandatory tender at a
price of par plus accrued interest (except between daily and weekly rate).
Moody's rating will apply to the Bonds in the weekly and daily rate modes only.
While the Bonds bear interest at a daily rate, the Bonds will pay interest on
the first business day of each month.
The trust indentures does not permit the issuance of additional bonds.
Flow of Funds
The trustee is instructed to draw under the letter of credit for principal and
interest in accordance with its terms in order to receive payment of principal
and/or interest on the Bonds on each interest payment date, maturity date,
redemption date or acceleration date of the Bonds.
The trustee is also instructed to draw under the letter of credit in
accordance with its terms on each purchase date for an amount sufficient,
along with any remarketing proceeds, to make full payment of purchase price on
all the Bonds tendered on the same business day. Bonds that 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 for the full amount of the
purchase price drawn for such Bonds.
Letter of Credit
The letter of credit provided by the Bank is sized for full principal plus 34
days of interest at the maximum rate of 12% applicable to the Bonds and will
provide coverage for the Bonds while they bear interest in the weekly or daily
rate mode. The letter of credit shall be subject to the ICC Publication No. 600.
Draws on the Letter of Credit
Conforming draws for principal and interest presented to the Bank by 4:00 prior
p.m., Eastern Time (ET), on a business day, will be honored by the Bank by 12:00
p.m., ET, the next business day. Conforming draws for purchase price presented
by 12:00 p.m., ET, on a business day, will be honored by the Bank by 2:00
p.m., ET, the same business day.
Reinstatement of Interest Draws
Draws for interest under the letter of credit shall be reinstated
automatically upon the Bank's honoring of the drawing.
Reimbursement Agreement Defaults
The Bank may at any time, send written notice to the trustee stating that an
event of default under the reimbursement agreement has occurred directing the
trustee to effect either a mandatory tender or acceleration of the Bonds. With
direction to tender, the trustee shall effect such tender no later than 9 days
following receipt of such notice. The LOC shall terminate upon the Bank's
honoring of the tender drawing. With direction to accelerate, the trustee shall
immediately declare an acceleration of the Bonds (at which time interest shall
cease to accrue) and draw on the LOC.
Indenture of Trust Events of Default Related to Payments
Upon a failure to pay when due and payable the principal, interest or purchase
price on the Bonds, the trustee shall declare an acceleration of the Bonds (at
which time interest shall cease to accrue).
Expiration / Termination of the Letter of Credit
The LOC shall terminate upon the earliest to occur of: (1) September 15, 2014,
unless extended; (2) the business day following the date all of the Bonds were
remarketed in the fixed rate; (3) the business day following the date that all
Bonds have been paid in full; (4) the earlier of (i) the date on which the Bank
honors a tender drawing or (ii) five business days following the mandatory
tender date, both resulting from the trustee's acceptance of an alternate
LOC; (5) the date the Bank honors the related tender drawing following
the trustee's receipt of such notice from the Bank indicating (i) an event of
default under the reimbursement agreement has occurred and (ii) directing the
trustee to effect a mandatory tender of the Bonds.
The Bonds will be subject to mandatory tender on the effective date of a
substitute letter of credit. Draws for purchase price upon the substitution of
the letter of credit will be made under the existing letter of credit.
Bondholders may optionally tender their Bonds during (a) the daily rate mode on
any business day with notice to the tender agent prior to 11:00 a.m., ET, on the
purchase date or (b) the weekly rate mode on any business day with at least
seven days prior notice to the tender agent.
The Bonds are subject to mandatory tender on the following dates: (1) the date
of interest rate conversion (except between daily and weekly rate); (2) on the
effective date of the alternate LOC; (3) on the fifth business day preceding the
expiration or termination of the LOC; (4) no more than 9 days following the
trustee's receipt of notice from the Bank indicating the occurrence of an event
of default under the reimbursement agreement and directing the trustee to effect
a mandatory tender of the Bonds; and, (5) any business day specified by the
hospital which date shall not be less than 20 days following the
trustee's receipt of such notice.
The Bonds are subject to mandatory sinking fund redemptions.
Last Rating Action
For more information on this issue please see the original new issue
report dated June 27, 2008.
What Could Change the Rating-Up
Long-term: The long-term rating on the Bonds would be raised if the long-term
other senior obligation (OSO) rating on the Bank was upgraded.
Short-term: Not applicable.
What Could Change the Rating-Down
Long-term: The long-term rating on the Bonds would be lowered if the long-term
OSO rating on the Bank was downgraded.
Short-term: The short-term rating on the Bonds would be lowered if the
short-term OSO rating on the Bank was downgraded.
Trustee: U.S. Bank, N.A.
Remarketing Agent: Goldman, Sachs & Co.
The principal methodology used in rating this issue was Letter of
Credit Supported Transactions rating methodology published in August 2005. Other
methodologies and factors that may have been considered in the process of rating
this issue can also be found on Moody's website.
Information sources used to prepare the credit rating are the following: parties
involved in the ratings and public information.
Moody's Investors Service considers the quality of information available on the
issuer or obligation satisfactory for the purposes of maintaining a credit
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 DOWNGRADES TO Aa1(ON WATCH FOR POSSIBLE DOWNGRADE) FROM Aaa THE LETTER OF CREDIT-BACKED RATING ASSIGNED TO CITY OF AURORA, COLORADO HOSPITAL REVENUE REFUNDING BONDS (THE CHILDREN'S HOSPITAL ASSOCIATION PROJECT) SERIES 2008B; AFFIRMS VMIG 1
Moody's Investors Service
250 Greenwich Street
New York, NY 10007