Fitch Takes Various Rating Actions on Mass HEFA Revs, Baystate Med Center Issue, Ser. K-2 (2009)

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has revised the basis of the long-term 'A+' rating and has assigned a short-term 'F1' rating to the $26,365,000 Massachusetts Health and Educational Facilities Authority revenue bonds, Baystate Medical Center Issue, series K-2 (2009)(the bonds). The Rating Outlook is Stable for the long-term rating.

The rating actions are in connection with the: (i) the conversion of the bonds to a weekly rate mode from a long-term rate mode; (ii) the addition of an irrevocable direct-pay letter of credit (LOC) provided by Bank of America, N.A, (BANA, rated 'A+/F1', Stable Outlook), as credit enhancement support for the bonds; and (iii) a mandatory tender of the bonds on July 1, 2015.

The bonds were initially issued in a long-term rate mode in 2009 and were rated 'A+', Stable Outlook by Fitch on Jan. 16, 2014.

KEY RATING DRIVERS:

The long-term rating is based on the higher of the underlying long-term rating assigned to the bonds by Fitch (currently rated 'A+', Stable Outlook), and the long-term rating assigned by Fitch to BANA, the bank providing the LOC securing the bonds. The short-term 'F1' rating is based solely on the LOC. For information about the underlying credit rating see the press release dated Jan. 16, 2014 available at 'www.fitchratings.com'.

BANA, as LOC provider, is obligated to make regularly scheduled payments of principal of and interest on the bonds in addition to payments due upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. Additionally, the bond obligor is in the flow of funds to make timely payments of principal and interest due upon maturity, acceleration and redemption. The credit-enhanced ratings will expire upon the earliest of: (a) July 1, 2020, the initial stated expiration date of the LOC, unless such date is extended; (b) conversion to a mode other than a weekly or daily rate; (c) any prior termination of the LOC; and (d) defeasance of the bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 54 days of interest at a maximum rate of 12% based on a year of 365 days and purchase price for tendered bonds, while in the daily and weekly rate modes. The Remarketing Agent for the bonds is Citigroup Global Markets, Inc. The bonds will be delivered on or about July 1, 2015.

The bonds initially bear interest at a weekly rate, but may be converted to a daily, bond interest term or fixed rate. While bonds bear interest in the weekly rate mode, interest payments are on the first Wednesday of each calendar month, commencing Aug. 5, 2015. The trustee is obligated to make timely draws on the LOC to pay principal, interest, and purchase price. Funds drawn under the LOC are held uninvested, and are free from any lien prior to that of the bondholders.

Holders may tender their bonds on any business day, provided the trustee, tender agent and remarketing agent are given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) on the first day of each interest rate period; (2) upon expiration, substitution or termination of the LOC; and (3) following receipt of written notice from the bank of an event of default under the Reimbursement Agreement directing a mandatory tender. The bank has the option of directing the trustee to accelerate the bonds rather than direct a mandatory tender upon an event of default under the Reimbursement Agreement or non-reinstatement of the LOC interest. There are no provisions for the issuance of additional bonds.

RATING SENSITIVITIES

The long-term rating is tied to the Fitch long-term rating assigned to the bonds and the long-term rating that Fitch maintains on the bank providing the LOC. Changes to one or both of these ratings may affect the long-term rating assigned to the bonds.

The short-term rating is exclusively tied to the short-term rating that Fitch maintains on the bank providing the LOC and will reflect all changes to that rating.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Rating Guidelines for Letter of Credit-Supported Bonds and Commercial Paper (pub. 21 May 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=866152

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 Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=987275

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=987275

Endorsement Policy

https://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/20150701006087/en/

Fitch Ratings
Primary Analyst
Linda Friedman
Senior Director
+1-212-908-0727
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Richard Park
Director
+1-212-908-0289
or
Committee Chairperson
Mario Civico
Senior Director
+1-212-908-0796
or
Media Relations:
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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