2008-11-08 13:12:01 -
- Fitch Ratings assigns the General Authority of Southcentral Pennsylvania's (the authority) 2008 revenue bonds (issued on behalf of WellSpan Health) the following ratings:
--$74,025,000 series 2008B at 'AA+/F1';
--$56,740,000 series 2008C at 'AA-/F1';
--$80,935,000 series 2008D at 'AA+/F1+'.
The long-term ratings assigned to series 2008B and 2008D are based jointly on the underlying rating assigned
to those bonds by Fitch on Aug. 28, 2008 (currently rated 'AA-' by Fitch), and the support provided by the LOCs issued by Citizens Bank of Pennsylvania (series 2008B) and SunTrust Banks (series 2008D) securing those bonds.
The long term 'AA-'rating for series 2008C is based on the higher of the 'A-' rating assigned by Fitch to Manufacturers and Traders Trust Company, which provides a direct-pay letter of credit (LOC) securing those bonds, and the 'AA-' underlying rating assigned.
The short-term 'F1+' and 'F1' ratings are based solely on the LOCs. The banks are Fitch rated as follows: Citizens Bank of Pennsylvania ('A+/F1'), Manufacturers and Traders Trust Company ('A-/F1'), and SunTrust Bank ('A+/F1+'; Rating Watch Negative).
For more information on Wellspan Health please see www.fitchratings.com for the press release published on Aug. 28, 2008.
The long-term ratings for series 2008B and series 2008D are based on Fitch's methodology which considers the joint probability 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.
Fitch has determined a low degree of correlation between each of Citizens Bank of Pennsylvania and SunTrust Bank and the obligor which results in a rating of 'AA+/F1' for the series 2008B and 'AA+/F1+' for series 2008D bonds. If either the underlying bond rating or the related bank rating were downgraded to 'A-' or lower, the joint probability could no longer be applied, and the long term rating for those bonds would then be adjusted to the higher of the bank rating and the underlying bond rating. The long term 'AA-'rating for series 2008C is based on the higher of the 'A-' rating assigned by Fitch to Manufacturers and Traders Trust Company, and the 'AA-' underlying rating assigned.
The banks are obligated to make payments of principal of and interest on the bonds upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. The rating will expire upon the earliest of: (a) Oct. 16, 2011 (series 2008B), Nov. 11, 2013 (series 2008C), and Nov. 11, 2011 (series 2008D), the initial stated expiration dates of the LOCs, unless such dates are extended; (b) any prior termination of the LOCs; (c) defeasance of the bonds.
The LOCs provide full coverage of principal plus an amount equal to 40 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 weekly and daily rate modes. The remarketing agent for the series 2008B and 2008D bonds is Citigroup Global Markets Inc. The remarketing agent for the series 2008C bonds is Manufacturers and Traders Trust Company. The bonds are expected to be delivered on or about Nov. 12, 2008.
The bonds initially bear interest at a weekly rate, but may be converted to a daily, long term, indexed put rate, or bond interest term rate. While bonds bear interest in the weekly rate mode, interest payments are on the first Wednesday of each month, commencing Dec. 3, 2008. While bonds bear interest in the daily rate mode, interest payments are on the fifth business day of each month. Holders may tender their bonds on any business day, provided the remarketing agent is given at least seven calendar days' prior notice of the purchase in the weekly rate mode, and notice by 9:00 a.m. New York time on the purchase date, in the daily rate mode. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate; (2) upon expiration, substitution or termination of the LOC; and (3) on the fourth business day following receipt of written notice from the bank of an event of default under the reimbursement agreement, directing such mandatory tender. Optional and mandatory redemption provisions also apply to the bonds.
Bond proceeds will be used by the authority to current refund all or a portion of certain bonds outstanding issued for the benefit of the members of the obligated group and Wellspan Properties, Inc., and to repay all or a portion of various loans from the Health Care Facilities Authority of Sayre, and with respect to series 2008D, to make loans from time to time to WellSpan Health, the members of the obligated group and their affiliates.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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 Ratings, New York
Joseph Staffa, 212-908-0829
or
Media Relations:
Cindy Stoller, 212-908-0526
Email:
cindy.stoller@fitchratings.com 
