New York, February 05, 2020 -- Moody's Investors Service has assigned a Aa1/VMIG 1 letter of credit backed
rating to Economic Development Authority of the City of Roanoke,
VA Hospital Revenue Refunding Bonds (Carilion Clinic Obligated Group)
Series 2020C (the Bonds). Wells Fargo Bank, N.A.
(the Bank) will provide a letter of credit (LOC) to support the Bonds.
RATINGS RATIONALE
The long-term rating will be based on 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 LOC Bank and the credit quality of Carilion Clinic Obligated
Group, VA (the Obligor); (ii) the probability of default in
payment by both parties; 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 Wells Fargo Bank, N.A. are Aa1(cr) / P-1(cr).
Moody's has assigned an underlying rating of Aa3 to the Bonds.
Moody's has determined that the joint probability of default between the
Bank and the Obligor 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. The short-term rating is based on the
short-term CR Assessment of the Bank.
FACTORS THAT COULD LEAD TO AN UPGRADE
• Moody's upgrades the long-term CR Assessment of the Bank,
or the underlying rating of the Bonds.
• Upgrade of the short-term rating is not applicable.
FACTORS THAT COULD LEAD TO A DOWNGRADE
• Moody's downgrades the long-term CR Assessment of the Bank,
or the underlying rating of the Bonds.
• Moody's assessment of the level of default dependence between the
Bank and the Obligor increases.
• Moody's downgrades the short-term CR Assessment of the Bank.
The LOC is sized to cover the principal plus thirty-five (35) days
of interest at 12%, the maximum rate applicable to the Bonds,
calculated based on 365-day year, and provides sufficient
coverage for the Bonds in the weekly rate mode only.
The trustee is instructed to draw on the LOC prior to 4:00 p.m.
(New York City time) on the business day prior to any principal or interest
payment date in order to receive funds on such payment date. In
the event that a bank fails to honor a draw under the LOC for payment
of principal and/or interest, the trustee is instructed to utilize
funds from the Obligor in the bond fund to make such payments to bondholders
in a full and timely manner.
The trustee is also instructed to draw on the LOC by 12:15 p.m.
(New York City time) on each purchase date, for purchase price to
the extent remarketing proceeds are insufficient. Tendered Bonds
purchased by the Bank are held by the trustee and will not be released
until the trustee has received confirmation from the Bank stating that
the LOC has been reinstated in the amount of the purchase price drawn
for such Bonds.
Prior to the expiration, termination or substitution of the LOC,
the Bonds are subject to payment funded with a draw on the LOC.
The payment will occur upon the mandatory tender or acceleration of such
Bonds, as provided below:
• Expiration: mandatory tender on the interest payment date
immediately preceding the expiration date of the LOC. The stated
expiration of the LOC is February 8, 2022.
• Substitution: mandatory tender on the substitution date.
The trustee draws on the existing LOC, which terminates on the business
day following such substitution.
• Interest rate conversion: mandatory tender upon conversion
of the interest rate. The LOC terminates on the earlier of (i)
the business day following conversion of all the Bonds to a rate mode
other than weekly, or (ii) upon the honoring of a purchase drawing
resulting from such interest rate conversion.
• Event of default under the reimbursement agreement: Upon
an event of default under the reimbursement agreement, the Bank
may, at its option, send written notice to the trustee that
such event has occurred with direction to either accelerate the Bonds
or cause a mandatory tender of the Bonds. Upon receipt of notice
directing mandatory tender, the trustee shall purchase the Bonds
on the third business day following receipt of such notice. Upon
receipt of notice with direction to accelerate, the trustee shall
declare the Bonds immediately due and payable upon which interest shall
cease to accrue on such declaration. The LOC terminates on the
15th day following the trustee's receipt of notice of an event of default
under the reimbursement agreement.
Conforming draws for principal and/or interest presented to the Bank prior
to 4:00 p.m. (New York City time) on a business day
will be honored by 1:00 p.m. (New York City time)
on the next business day. Conforming draws for purchase price presented
to the Bank prior to 12:15 p.m. (New York City time)
will be honored by the Bank by 2:30 p.m. (New York
City time) on the same business day. Draws for interest made under
the LOC shall be automatically reinstated on the date such interest drawing
is honored.
Bondholders may optionally tender Bonds in the weekly rate mode on any
business day by delivering written notice to the trustee, tender
agent and remarketing agent at least seven (7) calendar days prior to
the purchase date. Moody's long-term JDA and short-term
ratings only apply while the Bonds are in the weekly rate mode.
Bonds in the weekly rate mode pay interest on the first Thursday of each
month.
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. Please see
the Rating Methodologies page on www.moodys.com for a copy
of this methodology.
REGULATORY DISCLOSURES
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.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
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
Michael J. Loughlin
Vice President - Senior Analyst
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
