Global Credit Research - 25 Oct 2016
New York, October 25, 2016 -- Moody's Investors Service has affirmed the Aa3 long-term joint support letter of credit-backed rating of Maryland Health & Higher Educational Facilities Authority, Revenue Bonds (Adventist HealthCare, Inc. Project), Series 2005A (the Bonds). The short-term VMIG 1 rating assigned to the Bonds remains unchanged.
RATINGS RATIONALE
Moody's review of the long-term joint default analysis (JDA) rating of the Bonds resulted from Moody's downgrade of Adventist HealthCare, Inc.'s (AHC) rating to Baa3 from Baa2 on October 17, 2016. For more information on that rating action please see the rating update report published on such date.
The Bonds are supported by an irrevocable direct pay letter of credit provided by MUFG Union Bank, N.A. (the Bank). The long-term rating of the Bonds continues to be based on JDA, which reflects Moody's approach to rating jointly supported transactions. The JDA rating is based on (a) the long-term Counterparty Risk Assessment (CR Assessment) of the Bank as provider of the letter of credit, (b) the underlying rating of the Bonds, and (c) the structure and legal protections of the transaction which provide for timely debt service payments to investors.
Factors that Could Lead to an Upgrade
-Moody's upgrades the long-term CR Assessment of the Bank or the long-term underlying rating of the Bonds.
-The short-term rating upgrade is not applicable.
Factors that Could Lead to a Downgrade
-Moody's downgrades the long-term CR Assessment of the Bank or the long-term underlying rating of the Bonds.
-Moody's assessment of the default dependence between the Bank and AHC increases.
-Moody's downgrades the short-term CR Assessment of the Bank.
METHODOLOGY
The principal methodology used in this rating was Rating Transactions Based on the Credit Substitution Approach: Letter of Credit backed, Insured and Guaranteed Debts published in December 2015. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
Randy Matlosz
Analyst
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Joann Hempel
VP - Senior Credit Officer
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Adventist HealthCare, Inc., MD
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