CHICAGO--(BUSINESS WIRE)-- Fitch Ratings assigns an 'A' rating to the following expected issuances on behalf of Hartford HealthCare (HHC):

--$258.6 million series 2011A revenue bonds (Connecticut Health and Educational Facilities Authority);

--$88.7 million series 2011B variable rate demand revenue bonds (Connecticut Health and Educational Facilities Authority)*;

--$45.1 million series 2011C taxable variable rate demand bonds**.

The Rating Outlook is Stable.

*The series 2011B bonds are expected to supported by a direct pay letter of credit issued by Bank of America N.A. **The series 2011C bonds are expected to be supported by a direct pay letter of credit issued by JPMorgan Chase Bank, N.A. Fitch expects to assign long-term and short-term ratings on the series 2011B and C bonds on a date closer to pricing.

Proceeds from the series 2011 bonds will be used to refund outstanding debt, fund certain capital projects, pay swap termination costs, fund a debt service reserve fund and pay costs of issuance. The series 2011 bonds are expected to price the week of Sept. 21, 2011.

KEY RATING DRIVERS:

--Broad Operating Footprint: HHC is one of the two largest hospital systems in Connecticut and operates over 160 locations.

--Leading Market Position: HHC's inpatient market share in its primary service area increased from 31.4% in 2008 to 39% in 2010. No other provider has over 20%.

--Light Debt Burden: HHC's low debt burden is reflected in low debt to capitalization and strong debt service coverage.

--Mixed Liquidity Metrics: While days cash on hand remains below Fitch's 'A' category median, cushion ratio and cash to debt remain well above Fitch's 'A' category medians.

--Light Profitability for Rating Level: Historic operating profitability has been light; however, management is in the midst of a turnaround plan and has demonstrated improvements in

operations.

SECURITY:

Debt payments are secured by a pledge of the gross revenues of the obligated group, plus mortgages on obligated group campuses and a debt service reserve fund for the fixed rate debt.

CREDIT SUMMARY:

The 'A' rating reflects HHC's light debt burden, strong liquidity metrics relative to debt levels and leading market share in its primary service area. Credit concerns include historically low operating profitability.

HHC and the Central Connecticut Health Alliance (CCHA), the parent corporation of the Hospital of Central Connecticut (HOCC), affiliated in February 2011. Combined historical audited financial statements are not available. Fitch's financial analysis combined the individual audited financial statements of HHC and CCHA. HHC's July 31, 2011 interim financial statements incorporate CCHA and are being evaluated by the auditors at the time of publication. However, Fitch does not expect any material changes to the final interim numbers.

HHC's balance sheet is strong in relation to its debt burden however is low relative to operations. At July 31, 2011 HHC had $494.7 million of unrestricted cash and investments. Days cash on hand of 112 days is low for the rating category, while pro forma cushion ratio and pro forma cash to debt of 18.3 times (x) and 121.2% exceed Fitch's 'A' category medians of 15.4x and 113.8%. The light debt burden is further reflected in HHC's strong historical coverage of pro forma maximum annual debt service (MADS)of 4.7x in fiscal 2010 and 5.6x in the interim period.

HHC's large market footprint and market share should provide stability in operations and are a credit positive. HHC holds a 39% market share in its primary service area (PSA) and an 18.4% market share in the state of Connecticut. No other hospital holds more than 20% market share in the PSA. With approximately $1.9 billion in operating revenues, HHC is one of the two largest healthcare systems in Connecticut. The revenue base is accompanied by a broad market footprint of over 160 facilities, including five hospitals, 20 acute care satellite facilities and 22 primary care office locations.

A primary credit concern is operating profitability that is weak for the rating category. After a period of breakeven profitability, HHC brought in a new and experienced management team to turn around operations in 2008. Operating margin increased from 0% in fiscal 2008 to 1% in fiscal 2010. Management forecasted operating margins of 2% in fiscal 2011 and 3% in fiscal 2012. Operating margin equaled 2.6% for the 10-month interim period ending July 31, 2011.

The Stable Outlook reflects Fitch's expectation that coverage metrics will remain strong while operating profitability and liquidity will be in line with management's forecasted levels.

Headquartered in Hartford, Connecticut, Hartford HealthCare is comprised of four acute care hospitals with over 1,200 beds and a behavioral health hospital. Total revenue in fiscal 2010 equaled approximately $1.9 billion. HHC covenants to provide annual and quarterly disclosure which it posts to the Municipal Securities Rulemaking Board's EMMA system.

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

In addition to the sources of information identified in Fitch's U.S. Revenue-Supported Rating Criteria information was received from the underwriter.

Applicable Criteria and Related Research:

--'Revenue-Supported Rating Criteria', dated June 20, 2011;

--'Nonprofit Hospitals and Health Systems Rating Criteria', dated Aug. 12, 2011.

For information on Build America Bonds, visit 'www.fitchratings.com/BABs'.

Applicable Criteria and Related Research:

Revenue-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=637130

Nonprofit Hospitals and Health Systems Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648836

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