Fitch Rates $16.635MM Alaska Industrial Development & Export Auth Rfdg Revs Ser 2009B 'AA+/F1+'

October 30, 2009 1:20 PM EDT

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has assigned a rating of 'AA+/F1+' to the $16,635,000 Alaska Industrial Development and Export Authority refunding revenue bonds (Greater Fairbanks Community Hospital Foundation Project) series 2009B. The 'AA+' long-term component of the rating is based jointly on the rating that Fitch has assigned to the foundation's revenue bonds (currently rated 'A') and the support provided by an irrevocable, direct-pay letter of credit (LOC) issued by Bank of Montreal (currently rated 'AA-/F1+'), acting through its Chicago Branch. (For information about the basis for the long-term component of the rating, see the criteria report entitled 'Dual-Party Pay Criteria for Long-Term Ratings on LOC-Supported U.S. Public Finance Bonds' dated June 11, 2009 available on Fitch's web site at 'www.fitchratings.com'.) The 'F1+' short-term component of the rating is based solely on the LOC.

The long-term 'AA+' rating assigned to the bonds is based on Fitch's methodology that considers the likelihood of the failure of both a rated obligor and a bank LOC provider. The methodology results in a rating that is up to two notches higher than the stronger of the two credits if the following conditions are met: (1) both entities have a rating of 'A' or higher; (2) the transaction is structured such that payments from both the municipal issuer and the bank are in the flow of funds and both entities would have to fail to perform before the bonds defaulted; and (3) the credit of the bank and the rated obligor have no more than a medium degree of correlation. In this instance, Fitch has determined a low degree of correlation, which results in a rating of 'AA+/F1+' for the bonds. If either the rating assigned to the foundation's revenue bonds or the bank were to be downgraded to 'A-' or lower, this methodology would no longer be applicable and the long-term rating assigned to the bonds would reflect the higher of the two ratings.

Pursuant to the LOC, the bank is obligated to make payments of (1) principal of and interest on the bonds when due and (2) purchase price for tendered bonds while the bonds bear interest in the daily and weekly rate modes. The rating will expire on the earliest of: (i) Nov. 5, 2012, the LOC's expiration date, as such date may be extended; (ii) any prior termination of the LOC; and (iii) defeasance of the bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 46 days' interest at a maximum rate of 12% based on a 365-day year. The remarketing agent for the bonds is BMO Capital Markets GKST Inc. The bonds are expected to be delivered on or about Nov. 5, 2009.

The bonds will initially bear interest in the weekly rate mode, but may be converted to a daily, long-term or flexible rate. While bonds bear interest in the daily and weekly rate modes, interest is payable on the first business day of each month, commencing Dec. 1, 2009. Holders of bonds bearing interest in a daily or weekly rate mode may tender bonds for purchase with prior notice. The bonds are subject to mandatory tender: 1) on each interest rate mode conversion date (except when converting between daily and weekly modes); (2) on the business day following the last day of each flexible or term rate period; (3) on the date of substitution of the LOC; (4) five business days prior to expiration or termination, at the foundation's option, of the LOC; (5) on the third business day following the trustee's receipt of notice by the bank of an event of default under the reimbursement agreement; (6) on the second business day following the trustee's receipt of notice by the bank of non-reinstatement of the LOC; and (7) on any business day specified by the foundation, following 20 days prior notice. Optional and mandatory redemption provisions also apply to the bonds.

Proceeds of the sale of the bonds will be used to repay a prior draw on a KeyBank line of credit.

Additional information is available at 'www.fitchratings.com'.

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.

    Source: Fitch Ratings

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• KeyBanc
• BMO Capital
• Fitch Ratings

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