Wednesday, November 12, 2008

Fitch Rates Northeast Georgia Health System's (Georgia) Series 2007G Bank Bonds 'A' Und

(BUSINESS WIRE)--Fitch Ratings has assigned an underlying long-term rating of 'A' to bank bonds corresponding to revenue anticipation certificates, series 2007G, issued on behalf of Northeast Georgia Health System (NGHS) by the Hall County and Gainesville Hospital Authority. Also, Fitch confirms its underlying 'A' rating on NGHS's outstanding debt. The Rating Outlook is Stable.

Although NGHS's potential exposure to interest rate and term-out risks is considerable, this is largely offset by the system's robust financial profile and relatively good access to the capital markets indicated by its strong rating level. Essentially all of NGHS's outstanding debt consists of variable rate demand obligations (VRDOs), of which the $103 million series 2007G are currently held as bank bonds. Fitch Ratings has assigned an underlying long-term rating of 'A' to bank bonds corresponding to revenue anticipation certificates, series 2007G, issued on behalf of Northeast Georgia Health System (NGHS) by the Hall County and Gainesville Hospital Authority. Also, Fitch confirms its underlying 'A' rating on NGHS's outstanding debt. The Rating Outlook is Stable.

Although NGHS's potential exposure to interest rate and term-out risks is considerable, this is largely offset by the system's robust financial profile and relatively good access to the capital markets indicated by its strong rating level. Essentially all of NGHS's outstanding debt consists of variable rate demand obligations (VRDOs), of which the $103 million series 2007G are currently held as bank bonds. The standby bond purchase agreement for the series 2007G bonds allow for a 365 day cure period. Payment draws under other liquidity facility agreements, covering approximately 70% of NGHS's outstanding VRDOs, immediately begin to amortize over 36 months at bank rates which escalate to a minimum of 14% after 90 days. While these terms are somewhat severe, Fitch believes that the possibility of all, or close to all, of the VRDOs being put to the banks simultaneously and NGHS not being able to remarket or refinance these bonds in a reasonable amount of time is unlikely. Furthermore, with NGHS's ample liquidity (292.4 days cash on hand as of June 30, 2008) and strong cash flow generation (operating EBITDA of $82.3 million in fiscal 2007), the system can withstand a limited period of bank bond amortization without adversely affecting the 'A' rating. With the exception of the series 2007G bonds, NGHS's VRDOs are being remarketed successfully.

For more information on NGHS, please see Fitch research dated Aug. 11, 2008 at www.fitchratings.com.

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.

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