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Rating Update:

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

15 Sep 2010

$50.375 MILLION OF DEBT AFFECTED. SUBSTITUTE LETTER OF CREDIT PROVIDED BY U.S. BANK, NATIONAL ASSOCATION.

Aurora (City of) CO
Fully Supported
CO

Opinion

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.

RATINGS RATIONALE

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 the Bank.

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.

Additional Bonds

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.

Substitution

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.

Optional Tenders

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.

Mandatory Tenders

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.

Mandatory Redemptions

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.

Key Contacts

Trustee: U.S. Bank, N.A.

Remarketing Agent: Goldman, Sachs & Co.

METHODOLOGY

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.

REGULATORY DISCLOSURES

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 rating.

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.

Analysts

Lawrence Bellinger
Analyst
Public Finance Group
Moody's Investors Service

Michael J. Loughlin
Senior Credit Officer
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

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
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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