Fitch Rates $111M CO Health Facils Auth Revs (SCL Health Sys), Series 2016B & D 'F1+'

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has assigned an 'F1+' rating to the Colorado Health Facilities Authority revenue bonds (SCL Health System), consisting of $55,490,000 series 2016B and $55,490,000 series 2016D.

KEY RATING DRIVERS:

The short-term 'F1+' rating is based on the liquidity support provided by Wells Fargo Bank, rated 'AA/F1+'/Outlook Stable, in the form of a Standby Bond Purchase Agreement (SBPA), which has a stated expiration date of May 10, 2019, unless extended or earlier terminated, during the daily and weekly interest rate modes only. Fitch has also assigned a long-term rating of 'AA-'/Outlook Stable to the bonds. For more information on the long-term rating, please see Fitch's press release dated May 3, 2016.

The SBPA provides for the payment of the principal component of purchase price plus an amount equal to 35 days of interest calculated at a maximum rate of 12%, based on a year of 365 days for tendered bonds during the daily and weekly rate modes in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following an optional or mandatory tender. The SBPA will expire on May 10, 2019, the stated expiration date, unless such date is extended; upon conversion to any mode other than daily or weekly; or upon the occurrence of certain events of default which result in a mandatory tender or other events of default related to the credit of the bond obligor which result in an automatic and immediate termination. The remarketing agent for the 2016B bonds is Merrill Lynch, Pierce, Fenner & Smith Incorporated and the remarketing agent for the 2016D bonds is Morgan Stanley & Co LLC. The bonds are expected to be delivered on or about May 12, 2016.

The bonds will be issued in the weekly rate mode, but may be converted to a daily, flexible, flexible index, FRN Rate, Index, term or fixed rate modes. While bonds bear interest in the daily and weekly rate modes, interest is paid on the first business day of each month, commencing June 1, 2016. Holders of bonds bearing interest in the daily and weekly rate modes may tender their bonds for purchase with the requisite prior notice. The trustee is obligated to make timely draws on the SBPA to pay purchase price in the event of insufficient remarketing proceeds, and in connection with the expiration or termination of the SBPA, except in the case of the credit-related events permitting immediate termination or suspension of the SBPA.

Funds drawn under the SBPA are held uninvested, and are free from any lien prior to that of the bondholders. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate, except when converting between daily and weekly rate modes; (2) upon expiration, substitution or termination of the SBPA; and (3) following the receipt of written notice from the bank of an event of default under the SBPA, directing such mandatory tender. Optional and mandatory redemption provisions also apply to the bonds.

Bond proceeds will be used to reimburse the health system for capital projects that have been substantially completed.

RATING SENSITIVITIES

The short-term rating reflects the short-term rating that Fitch maintains on the bank providing liquidity support and will be adjusted upward or downward in conjunction with the short-term rating of the bank and, in some cases, the long-term rating of the bond obligor.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Rating Criteria for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support (pub. 28 Jan 2016)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=876837

U.S. Municipal Structured Finance Criteria (pub. 23 Feb 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=862222

Additional Disclosures

Dodd-Frank Rating Information Disclosure Formhttps://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1004037

Solicitation Statushttps://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004037

Endorsement Policyhttps://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160505006135/en/

Fitch Ratings
Primary Analyst:
Janet Rosen, +1-312-368-3172
Analytical Consultant
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst:
Joseph Staffa, +1-212-908-0829
Senior Director
or
Committee Chairperson:
Mario Civico, +1-212-908-0796
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
New York
[email protected]

Source: Fitch Ratings

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