Fitch Rates Grand Traverse Co (MI) Hosp Fin Auth VRBs (Munson Healthcare), Series 2011B 'AA+/F1+'

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings assigns a rating of 'AA+/F1+', Outlook Stable to the $24,825,000 County of Grand Traverse Hospital Finance Authority variable rate revenue refunding bonds (Munson Healthcare Obligated Group), series 2011B. The long-term 'AA+', Outlook Stable rating is determined using Fitch's dual-party pay criteria and is based jointly on the underlying rating assigned to those bonds by Fitch (currently rated 'AA-', Outlook Stable), and the support provided by the letter of credit (LOC) issued by JPMorgan Chase Bank, N.A. (JPMorgan; rated 'AA-/F1+', Outlook Stable). The short-term 'F1+' rating is based solely on the LOC. For information about the underlying credit rating, see Fitch's press release dated July 13, 2011 available at 'www.fitchratings.com'.

Fitch's dual-party pay criteria consider the likelihood of the failure of both a rated obligor and a bank LOC provider. The methodology results in a long-term 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 JPMorgan and the obligor which results in a rating of 'AA+', Outlook Stable for the bonds. If either the underlying bond rating or the bank rating were downgraded to 'A-' or lower, the dual-party pay criteria could no longer be applied, and the long-term rating assigned to the bonds would then be adjusted to the higher of the bank rating and the underlying bond rating.

The bank is 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 ratings will expire upon the earliest of: (a) Aug. 10, 2016, the initial stated expiration date of the LOC, unless such date is extended; (b) conversion to any mode other than daily or weekly; (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 35 days of interest at a maximum rate of 10% 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 Merrill Lynch, Pierce, Fenner & Smith Incorporated. The bonds are expected to be delivered on or about Aug. 10, 2011.

The bonds initially bear interest at a weekly rate, but may be converted to a daily, adjustable or fixed rate. While bonds bear interest in the weekly and daily rate modes, interest payments are on the first business day of each month, commencing Sept. 1, 2011. 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 and remarketing agent are given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate; and (2) upon expiration, substitution or termination of the LOC. The bonds shall be accelerated following trustee's receipt of notice of an event of default under the reimbursement agreement. Optional and mandatory redemption provisions also apply to the bonds. There are no provisions for the issuance of additional bonds.

Bond proceeds will be used to refinance outstanding debt of Munson Healthcare.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Rating Criteria', April 25, 2011;

--'Rating Guidelines for Letter of Credit-Supported Bonds', July 26, 2011;

--'Dual-Party Pay Criteria for Long-Term Ratings on LOC-Supported U.S. Public Finance Bonds', March 10, 2011.

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=624129

Rating Guidelines for Letter of Credit-Supported Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647311

Dual-Party Pay Criteria for Long-Term Ratings on LOC-Supported U.S. Public Finance Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=611525

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.



CONTACT:

Fitch Ratings
Cindy Stoller, +1-212-908-0526
Media Relations, New York
[email protected]
or
Primary Analyst:
Trudy Zibit, +1-212-908-0689
Managing Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Janet Rosen, +1-312-368-3172
or
Committee Chairperson:
Joseph Staffa, +1-212-908-0829
Senior Director

KEYWORDS:   United States  North America  Michigan  New York

INDUSTRY KEYWORDS:   Health  Hospitals  Professional Services  Finance

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