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Fitch Affirms Advocate Health Care's (IL) Self-Liquidity Bonds at 'F1+'

CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed its 'F1+' short-term rating on the following bonds based on self-liquidity provided by Advocate Health Care Network (Advocate):

--$21.9 million Illinois Health Facilities Authority revenue bonds, series 2003A;

--$21.2 million Illinois Health Facilities Authority revenue bonds, series 2003C;

--$21.9 million Illinois Finance Authority revenue bonds, series 2008C-3B;

--$70 million Illinois Finance Authority revenue bonds, series 2011B.

KEY RATING DRIVERS

LIQUID RESOURCES AVAILABLE FOR UNREMARKETED PUTS: The 'F1+' rating reflects Advocate's availability of highly liquid resources to cover the mandatory tender on its put bonds. At March 31, 2013, Advocate's eligible cash and investment position available for same-day settlement would cover the cost of the maximum mandatory put on any given date well in excess of Fitch's criteria of 1.25x.

STRONG FINANCIAL PROFILE: Fitch rates Advocate's long-term obligations at 'AA'. The long-term rating reflects Advocate's consistently strong operating performance, light debt burden, robust liquidity and leading market position. Advocate's solid operating cash flow generation continues to support substantial balance sheet strength and its liquidity indicators consistently exceed Fitch's 'AA' category median ratios.

RATING SENSITIVITIES

MAINTENANCE OF ADEQUATE LIQUIDITY: Fitch expects Advocate to sustain adequate internal liquid resources to cover its total put exposure in excess of 1.25x to maintain the 'F1+' short-term rating.

CREDIT PROFILE

Advocate is an integrated health care system serving the Chicago metropolitan area and central Illinois. The system includes 11 acute care hospitals and a children's hospital (totaling approximately 3,500 licensed beds), primary and specialty physician services, home health, hospice, and outpatient centers serving the Chicago metropolitan area and central Illinois. Total revenues in audited fiscal 2013 (Dec. 31 fiscal year end) were $4.9 billion.

Fitch's analysis is based on the consolidated system. The obligated group consists of Advocate Health Care Network Corp, Advocate Health and Hospitals, Advocate North Side Health Network, and Advocate Condell Medical Center. As of Dec. 31, 2013, the obligated group represented approximately 86% of total assets and 88.7% of total operating revenues of the consolidated system.

SELF-LIQUIDITY

Advocate provided Fitch with an internal procedures letter outlining the procedures to meet any un-remarketed puts. In addition, Advocate provides monthly liquidity reports to Fitch to monitor the sufficiency of Advocate's cash and investment position relative to its mandatory put exposure.

DISCLOSURE

Advocate's disclosure includes annual audited financial statements as well as quarterly unaudited balance sheet, income statement, cash flow statement, an extensive MD&A, and utilization statistics. The information is posted to the Municipal Securities Rulemaking Board's EMMA system. In addition, management holds routine calls with rating agencies and with investors. Fitch considers Advocate's disclosure standards to be best practice.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Rating U.S. Public Finance Short-Term Debt', (Dec. 9, 2013);

--'U.S. Nonprofit Hospitals and Health Systems Rating Criteria' (May 30, 2014).

Applicable Criteria and Related Research:

Rating U.S. Public Finance Short-Term Debt

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724680

U.S. Nonprofit Hospitals and Health Systems Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=746860

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=838777

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Contacts

Fitch Ratings
Primary Analyst
Emily E. Wadhwani, +1 312-368-3347
Associate Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Kathleen Proux, +1 312-368-3348
Analyst
or
Committee Chairperson
James LeBuhn, +1 312-368-2059
Senior Director
or
Media Relations, New York
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com