Fitch Rates Trinity Health (Michigan) VRDBs and CP 'F1+'

CHICAGO--(BUSINESS WIRE)--Fitch Ratings has assigned short-term ratings of 'F1+' to Trinity Health Credit Group (Trinity) based on its self-liquidity for the following variable-rate demand bonds (VRDBs):

--$392,700,000 Michigan State Hospital Finance Authority variable-rate revenue and refunding bonds (Trinity Health Credit Group), series 2008C;

--$394,620,000 Indiana Health Facilities Financing Authority variable-rate revenue and refunding bonds (Trinity Health Credit Group), series 2008D;

--$40,410,000 Michigan State Hospital Finance Authority variable-rate revenue bonds (Trinity Health Credit Group), series 2005E;

--$50,310,000 Michigan State Hospital Finance Authority variable-rate revenue bonds (Trinity Health Credit Group), series 2005F;

--$47,315,000 Iowa Finance Authority variable-rate refunding and revenue bonds (Trinity Health Credit Group), Series 2000D;

--$38,100,000 Franklin County, Ohio, variable-rate demand revenue bonds (Trinity Health Credit Group), series 1995.

In addition, Fitch assigns its short-term rating of 'F1+' to Trinity's combined total of $400 million for its taxable and tax exempt commercial paper (CP) program.

The 'F1+' rating reflects the adequacy of Trinity's eligible cash, investments, and dedicated lines of credit (see Fitch's report 'Guidelines for Rating Variable-rate Demand Bonds and Commercial Paper Issued with Internal Liquidity' dated March 7, 2006) to pay the maximum put exposure in any given week. At September 30, 2008, Trinity had a total of $889.6 million of highly liquid, unrestricted cash and fixed income available to fund any unremarketed puts. In addition, Trinity expects to increase its eligible liquidity position to $942.7 million upon closing as the corporation reimburses itself for prior capital expenditures. Finally, Trinity has secured a $676 million dedicated credit agreement to fund liquidity on the above referenced bonds that is comprised of six banks. Combining the corporation's eligible cash and investment position with amounts recognized by Fitch under the dedicated credit facility, Trinity has total funding sources available to meet the maximum one-week tender exposure of 164.83%, which exceeds Fitch's 125% threshold for assignment of an 'F1+' short-term rating. Furthermore, the lead time for renewal of the credit agreement, the sizable investment position available that can be moved to liquid cash accounts, and Trinity's 'AA' market access provides appropriate bondholder protection to garner an 'F1+' rating.

The Revolving Credit Agreement is solely dedicated for the use of meeting unremarketed puts on the variable-rate demand bonds listed above as well as Trinity's commercial paper program. Five of the six participant banks are rated 'F1+' by Fitch and previously had supported many of the outstanding variable-rated demand bonds listed above via dedicated liquidity facilities. The credit agreement has a term of one year. Trinity plans to begin the renewal negotiations 90 days in advance of the end of the agreement. Trinity has included in its written procedure letter to Fitch that if the full amount of the Credit Agreement is not renewed 30 days prior to the agreement expiration, the corporation will convert appropriate amounts of its investment portfolio to eligible cash and short term investment under Fitch's criteria to maintain an 'F1+' rating.

Fitch has received a written internal procedures letter from Trinity which outlines internal policies to meet any funding requirements. Trinity's corporate treasury function and its financial disclosure and reporting practices are one of the best among Fitch's rated hospital borrowers. Furthermore, Trinity will provide Fitch monthly investment reports, which will be used to monitor Trinity's cash and investment position relative to its liquidity coverage on a monthly basis.

Trinity is the fifth largest nonprofit health care system in the U.S. and comprises 44 hospitals (29 owned and 15 managed) and other related health care entities. Trinity is headquartered in Novi, MI, with core operations in California, Idaho, Indiana, Iowa, Maryland, Michigan, and Ohio, and had $6.38 billion in total operating revenue in fiscal 2008. Trinity covenants to provide annual audited financial statements, which include a balance sheet, income statement, and management discussion and analysis, direct to bondholders and the NRMSIRs within 150 days of each fiscal year-end and quarterly disclosure within 90 days of each quarter end.

For further information on Trinity, please see Fitch's research report 'Trinity Health Credit Group, Michigan - rev & refunding bonds series 2008A, B, C, & D' dated Oct. 27, 2008, available on the Fitch web site 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.