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Rating Action:

Moody's assigns Aa1/VMIG 1 to Partners HealthCare's LOC-backed revenue bonds Ser. M-1 and M-2

Global Credit Research - 22 Jan 2014

$100M of debt affected. Ratings based on joint support from the letter of credit providers and Partners HealthCare System.

New York, January 22, 2014 --

Moody's Rating

Issue: Ser. M-1; Rating: Aa1/VMIG 1; Sale Amount: $50,000,000; Expected Sale Date: 1/30/14; Rating Description: JDA -- Letter of Credit

Issue: Ser. M-2; Rating: Aa1/VMIG 1; Sale Amount: $50,000,000; Expected Sale Date: 1/30/14; Rating Description: JDA -- Letter of Credit

Opinion

Moody's Investors Service has assigned Aa1/ VMIG 1 letter of credit backed ratings to the Massachusetts Development Finance Authority Revenue Bonds Partners HealthCare System Issue Series M-1 and M-2 (M-1 Bonds and M-2 Bonds respectively, or the Bonds collectively). Letters of credit (LOCs) will be provided by U.S. Bank National Association (US Bank) for the M-1 series and The Bank of New York Mellon (BNYM, or the Banks collectively) for the M-2 series. Bond proceeds will be used to finance the construction of new facilities.

SUMMARY RATING RATIONALE

Moody's has evaluated the Bonds based on a joint default analysis (JDA) which reflects Moody's approach to rating jointly supported transactions. JDA incorporates: (i) the long-term ratings of the Banks, as providers of the letters of credit, and the Partners HealthCare System (Partners); (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 has determined the joint probability of default between each Bank and Partners to be low which results in long-term JDA ratings of Aa1 for each Series of 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 rating of the applicable Bank.

The long-term and short-term senior-most unsecured ratings of US Bank and BNYM are Aa3/P-1 and Aa2/P-1 respectively.

Moody's currently maintains an underlying rating of Aa2 on the Bonds.

WHAT COULD CHANGE THE RATING-UP

Long-Term: The long-term rating of the Bonds could be raised if the long-term rating of the applicable Bank was upgraded or the long-term underlying rating of the Bonds was upgraded.

Short-Term: Not applicable

WHAT COULD CHANGE THE RATING-DOWN

Long-Term: The long-term rating on the Bonds could be lowered if the long-term rating of the applicable Bank was downgraded or the long-term underlying rating of the Bonds was downgraded, or if there is an increase in the level of default dependence between the Bank and Partners.

Short-Term: The short-term rating on the Bonds could be lowered if the short-term rating of the applicable Bank was downgraded.

Key Contacts

Trustee: Wells Fargo Bank, N.A.

M- 1 Remarketing Agent: US Bancorp Investment, Inc. and U.S. Bank Municipal Securities Group

M- 2 Remarketing Agent: BNY Mellon Capital Markets, LLC

The principal methodology used in this rating was Rating Transactions Based on the Credit Substitution Approach: Letter of Creditbacked,Insured and Guaranteed Debts published in March 2013. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt 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 rating action on the support provider and in relation to each particular 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 rating action, and whose ratings may change as a result of this 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.

Josephine Castro
Analyst
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Michael J Loughlin
Vice President - Senior Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns Aa1/VMIG 1 to Partners HealthCare's LOC-backed revenue bonds Ser. M-1 and M-2
No Related Data.

 

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