New York, December 02, 2021 -- Moody's Investors Service (Moody's) has affirmed the Aa1/ VMIG 1 letter
of credit-backed rating of the Indiana Finance Authority,
Health System Revenue Bonds, Series 2008F (Sisters of St.
Francis Health Services, Inc. Obligated Group) (the Bonds)
in connection with the issuance of a substitute letter of credit (LOC)
to be provided by Barclays Bank PLC (the Bank).
RATINGS RATIONALE
Upon the effective date of the substitute LOC, currently scheduled
for December 16, 2021, the long-term rating will continue
to be based on a joint default analysis (JDA) which reflects Moody's approach
to rating jointly supported transactions. JDA incorporates:
(i) the long-term Counterparty Risk (CR) Assessment of the Bank,
as provider of the LOC, and the rating of the Franciscan Alliance,
Inc. (formerly known as Sisters of St. Francis Health Services,
Inc.) (the Borrower); (ii) the probability of default in payment
by the Bank and the Borrower; and (iii) the structure and legal protections
of the transaction, which provide for timely debt service payments.
Moody's current long-term and short-term CR Assessments
of the Bank are A1(cr) and P-1(cr), respectively.
Moody's currently maintains an underlying rating of Aa3 on the Bonds.
Moody's has determined that the joint probability of default between the
Bank and the Borrower is low which results in credit risk consistent with
a JDA rating of Aa1 for the Bonds. Moody's assessment of the likelihood
of timely payment of purchase price is reflected in the short-term
rating of the Bonds, which is based on the short-term CR
Assessment of the Bank.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
• Moody's upgrades the underlying rating of the Bonds or the long-term
CR Assessment of the Bank.
• Upgrade of the short-term rating is not applicable.
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
• Moody's downgrades the underlying rating of the Bonds or the long-term
CR Assessment of the Bank.
• Moody's determines that the default dependence between the Borrower
and the Bank has increased.
• Moody's downgrades the short-term CR Assessment of the Bank.
The LOC is sized for the outstanding principal amount of the Bonds plus
51 days of interest at 12%, the maximum rate applicable to
the Bonds, and provides sufficient coverage while the Bonds are
in the weekly and daily rate modes.
The trustee is instructed to draw on the LOC, in accordance with
its terms, in order to receive sufficient funds to make timely payment
of principal and interest to bondholders. In the event that the
Bank fails to honor any valid draw on the LOC for any payment of principal
and/or interest, the trustee is instructed to use funds deposited
by the Borrower to make such payments to bondholders in a full and timely
manner.
The trustee is also instructed to draw on the LOC, in accordance
with its terms, on each purchase date in order to receive sufficient
funds from the Bank to pay the purchase price due on the Bonds to the
extent remarketing proceeds are insufficient. Bonds which are purchased
by the Bank due to a failed remarketing will be delivered to the Bank
but will not be remarketed to a new holder until the tender agent has
received confirmation from the Bank stating that the LOC has been reinstated
in the amount of the purchase price drawn for such Bonds.
Upon mandatory tender, redemption or acceleration the Bonds are
subject to payment funded with a draw on the LOC. Prior to the
termination or expiration of the LOC the Bonds are subject to mandatory
tender or acceleration as follows:
» Expiration of the LOC: mandatory tender on the fifth (5th)
business day prior to the stated expiration date of the LOC; the
LOC's stated expiration date is December 16, 2025;
» Substitution of the LOC: mandatory tender on the LOC substitution
date;
» Interest rate mode conversion: mandatory tender upon each
conversion of the interest rate mode;
» Event of default under the reimbursement agreement: following
an event of default under the reimbursement agreement the Bank may direct
the trustee to cause a mandatory tender or acceleration of the Bonds.
Upon the trustee's receipt of notice with direction to cause mandatory
tender, the Bonds will be subject to mandatory tender on the fourth
(4th) business day after receipt of such notice from the Bank.
Upon the trustee's receipt of notice with direction to cause acceleration,
the Bonds will be subject to immediate acceleration. The trustee
is instructed to draw on the LOC immediately upon declaration to provide
for the payment of principal and interest due and payable on the Bonds
on the date of acceleration.
Conforming draws for principal and/or interest received by the Bank at
or prior to 4:00 p.m., on a business day,
will be honored by the Bank by 12:00 p.m., on
the next business day. Conforming draws for purchase price received
by the Bank at or prior to 12:45 p.m., on a
business day, will be honored by 2:45 p.m.,
on the same business day. (All times referred herein are New York
time).
Draws made under the LOC for interest shall be automatically reinstated
by the Bank at 9:00 a.m. New York time on the fifth
(5th) calendar day after the date of such drawing unless the trustee receives
prior notice of non-reinstatement due to the Borrower's failure
to reimburse the Bank for such drawing or the occurrence of another event
of default under the Reimbursement Agreement from the Bank with direction
to cause a mandatory tender or acceleration of the Bonds. Upon
the trustee's receipt of notice with direction to cause mandatory tender,
the Bonds will be subject to mandatory tender on the fourth (4th) business
day after receipt of such notice from the Bank. Upon the trustee's
receipt of notice with direction to cause acceleration, the Bonds
will be subject to immediate acceleration. The trustee is instructed
to draw on the LOC immediately upon declaration to provide for the payment
of principal and interest due and payable on the Bonds on the date of
acceleration.
Bondholders may optionally tender Bonds in the weekly mode on any business
day with seven (7) days prior notice to the trustee, tender agent
and the remarketing agent. Bondholders may optionally tender Bonds
while in the daily rate mode on any business day by providing notice by
11:00 a.m. to the trustee, tender agent and
remarketing agent. Bondholders tendering the Bonds will receive
purchase price equal to the par amount of the Bonds tendered plus accrued
interest to the tender date.
The Bonds will continue to bear interest in the weekly rate mode with
interest payable on the first business day of each month. In the
daily rate mode, interest on the Bonds is paid on the fifth (5th)
business day of each month. The interest rate on the Bonds may
be converted, in whole, to the daily, long term,
bond interest term or auction modes. Moody's JDA and short-term
ratings apply to the Bonds in the weekly and daily modes only.
The principal methodology used in these ratings was Rating Transactions
Based on the Credit Substitution Approach: Letter of Credit-backed,
Insured and Guaranteed Debts published in May 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1068154.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and sensitivity
analysis, see the sections Methodology Assumptions and Sensitivity
to Assumptions in the disclosure form. Moody's Rating Symbols and
Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
to a program for which the ratings are derived exclusively from existing
ratings in accordance with Moody's rating practices. For ratings
issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain regulatory disclosures in relation to the provisional
rating assigned, and in relation to a definitive rating that may
be assigned subsequent to the final issuance of the debt, in each
case where the transaction structure and terms have not changed prior
to the assignment of the definitive rating in a manner that would have
affected the rating. For further information please see the ratings
tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated
agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the UK and is endorsed
by Moody's Investors Service Limited, One Canada Square,
Canary Wharf, London E14 5FA under the law applicable to credit
rating agencies in the UK. Further information on the UK endorsement
status and on the Moody's office that issued the credit rating is
available on www.moodys.com.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Jacek Stolarz
Asst Vice President - Analyst
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Joann Hempel
VP - Senior Credit Officer
Public Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
