Fitch Ratings assigns a rating of 'AA-/F1+' to the $52,795,000 Industrial Development Authority of the County of Yavapai hospital revenue bonds (Northern Arizona Healthcare System), series 2008B (the bonds).
The rating is based on the support provided by an irrevocable direct-pay letter of credit (LOC) issued by Banco Bilbao Vizcaya Argentaria, S.A. (the bank), securing the bonds. The bank is obligated to make payments of principal and interest on the bonds upon maturity, acceleration and redemption, as well as the purchase price for tendered bonds.
The rating will expire upon the earliest of: Jan. 7, 2012, the stated expiration date of the LOC, unless such date is extended; any prior termination of the LOC; and upon the defeasance of the bonds. The LOC provides full coverage of principal plus an amount equal to 34 days' interest at a maximum rate of 12% based on a 360-day year and purchase price for tendered bonds during the weekly rate only. The Remarketing Agent for the bonds is RBC Capital Markets Corporation. The bonds are expected to be delivered on or about Jan. 8, 2009.
The bonds initially bear interest at the weekly interest rate, but may be converted to a daily, commercial paper, or long-term mode. While bonds bear interest in the weekly mode, interest payments are the first business day of each month, commencing Feb. 2, 2009. Bondholders may tender their Bonds on any business day, provided that the trustee, The Bank of New York Mellon Trust Company, and remarketing agent are given prior written notice of the purchase demand.
The bonds are subject to mandatory tender on: (i) each conversion date; (ii) the fifth business day preceding the termination, expiration, or substitution of the LOC; and (iii) the fifth business day following the trustee's receipt of a written notice from the bank stating that either (a) there has been an event of default under the reimbursement agreement or (b) the interest component of the LOC will not be reinstated and in either case directing a mandatory tender of the bonds. Optional and mandatory redemption provisions also apply to the bonds.
The bond proceeds will be used to (i) finance the costs of improvements to the borrower's healthcare facilities; (ii) refund the issuer's hospital revenue bonds, (Northern Arizona Healthcare System), series 2005 auction rate certificates; and (iii) pay certain costs related to the issuance of the bonds.
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.