Fitch Rtes Johnson City Hlth & Ed Facils Bd, TN (Mountain States Hlth Alliance) Ser 13A&B 'AA-/F1+'

NEW YORK--()--Fitch Ratings assigns a rating of 'AA-/F1+' to the following City of Johnson Health and Educational Facilities Board, Tennessee bonds:

--$16,235,000 hospital revenue bonds (Mountain States Health Alliance), series 2013A;
--$99,680,000 taxable hospital revenue bonds (Mountain States Health Alliance), series 2013B.

The Rating Outlook is Stable for the long-term rating.

KEY RATING DRIVERS:
The rating is based on the support provided by irrevocable direct- pay letters of credit (LOCs) issued by U.S. Bank, National Association (rated 'AA-/F1+' by Fitch) for each series.

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) July 30, 2018, the initial stated expiration date of each LOC, unless such date is extended; (b) conversion to a medium term or fixed interest rate mode; (c) any prior termination of the LOCs; and (d) defeasance of the bonds. The LOCs provide full and sufficient coverage of principal plus an amount equal to 37 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 weekly rate mode. The Remarketing Agents are U.S. Bancorp Investments, Inc. for the series 2013A bonds and BofA Merrill Lynch for the series 2013B bonds. The bonds are expected to be delivered on or about July 30, 2013.

Each series of bonds initially bears interest at a weekly rate, but may be converted to a medium term or fixed rate. While bonds bear interest in the weekly rate mode, interest payments are on the first business day of each month, commencing Sept. 3, 2013. The trustee is obligated to make timely draws on the LOCs to pay principal, interest, and purchase price. Funds drawn under the LOCs are invested in accordance with rating guidelines and mature when needed, and are free from any lien prior to that of the bondholders.

Holders may tender their bonds on any business day, provided the trustee and remarketing agent is given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate; and (2) upon expiration, substitution or termination of the LOCs. The bonds shall be accelerated following trustee's receipt of notice of an event of default under the reimbursement agreement and 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 for the series 2013A proceeds will be used to finance or refinance capital improvement and equipment acquisitions at facilities owned by the Alliance and its affiliates, and the series 2013B proceeds will be used by the Alliance and related entities to refund the issuers hospital revenue bonds (Mountain States Health Alliance), series 2007B-2.

RATING SENSITIVITIES:
The rating is exclusively tied to the short- and long-term rating that Fitch maintains on the bank providing the LOC and will reflect all changes to that rating.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:
--'U.S. Municipal Structured Finance Criteria', February 27, 2013;
--'Rating Guidelines for Letter of Credit-Supported Bonds', June 14, 2013.

Applicable Criteria and Related Research:
U.S. Municipal Structured Finance Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=701570
Rating Guidelines for Letter of Credit-Supported Bonds
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=710476

Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=797807
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Contacts

Fitch Ratings
Primary Analyst:
Mario Civico, +1-212-908-0796
Senior Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Linda Friedman, +1-212-908-0727
Senior Director
or
Committee Chairperson:
Joseph Staffa, +1-212-908-0829
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst:
Mario Civico, +1-212-908-0796
Senior Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Linda Friedman, +1-212-908-0727
Senior Director
or
Committee Chairperson:
Joseph Staffa, +1-212-908-0829
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com