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TMCNet:  Fitch Rts $63.6MM St. Mary Hosp Auth, Hlth Sys Revs, Catholic Health East, Ser 2012B 'AA-/F1+'

[January 04, 2013]

Fitch Rts $63.6MM St. Mary Hosp Auth, Hlth Sys Revs, Catholic Health East, Ser 2012B 'AA-/F1+'

NEW YORK --(Business Wire)--

Fitch Ratings assigns a rating of 'AA-/F1+', Stable Outlook to the $63,615,000 Saint Mary Hospital Authority, health system revenue bonds, Catholic Health East Issue, series 2012B. The rating is based on the support provided by an irrevocable direct- pay letter of credit (LOC) issued by The Bank of New York Mellon (rated 'AA-/F1+', Stable Outlook by Fitch).

The bank 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. The ratings will expire upon the earliest of: (a) Jan. 9, 2018, the initial stated expiration date of the LOC, unless such date is extended; (b) two days after the conversion to an interest rate mode other than the daily or weekly 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 42 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 or weekly rate mode. The Remarketing Agent for the bonds is J.P. Morgan Securities LLC. The bonds are expected to be delivered on or about Jan. 9, 2013.

The bonds initially bear interest at a weekly rate, but may be converted to a daily, unit pricing, term, index, stepped coupon 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 Feb. 1, 2013. 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 while in the weekly or daily rate modes, provided the remarketing agent and tender agent are given the requisite prior notice of the purchase. The bonds are subject to mandatory tendr: (1) on the respective purchase dates for bonds in the unit pricing, index and term rate modes, (2) upon conversion of the interest rate; (3) upon expiration or substitution of the LOC; and (4) following receipt of written notice from the bank of an event of default under the reimbursement agreement and directing such mandatory tender. The bank has the option of directing an acceleration rather than a mandatory tender upon an event of default under the reimbursement agreement. The bonds shall be accelerated following trustee's receipt of notice of the non-reinstatement of the LOC interest. 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 finance (i) the acquisition, installation and implementation of an electronic medical records system and (ii) miscellaneous capital expenditures for Catholic Health East, St. Mary Medical Center, Mercy Fitzgerald Hospital, Mercy Suburban Hospital, Mercy Philadelphia Hospital and Nazareth Hospital, located in Pennsylvania.

Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Rating Criteria', February 28, 2012;

--'Rating Guidelines for Letter of Credit-Supported Bonds', June 20, 2012.

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm rpt_id=672570

Rating Guidelines for Letter of Credit-Supported Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm rpt_id=681737

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 (News - Alert) 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.


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