Fitch Rates NC Medical Care Commission Rev Bonds (FirstHealth of Carolinas Proj)

Fitch Ratings affirms the 'AA' long-term rating and assigns an 'F1+' short-term rating to the $106,845,000 North Carolina Medical Care Commission, variable rate demand health care facilities revenue refunding bonds (FirstHealth of the Carolinas Project), series 2008 consisting of:
--$75,015,000 series 2008A;
--$31,830,000 series 2008B.
The long-term 'AA' rating assigned to the bonds is based on the credit quality of the revenue refunding bonds of FirstHealth of the Carolinas, Inc. Fitch assigned an 'AA' to the expected issuance of $197 million in series 2008A-D bonds on Sept. 11, 2008. Fitch affirms its 'AA' on the series 2008A&B bonds and withdraws its rating on the series 2008C&D bonds, as they will not be issued. (For more information on FirstHealth of the Carolinas, Inc., see Fitch's press release dated Sept. 11, 2008, which can be found at www.fitchratings.com). The short-term 'F1+' rating is based on the liquidity support of two separate standby bond purchase agreements (SBPAs) provided severally by Branch Banking and Trust Company.
The SBPAs provide for the payment of the purchase price of tendered bonds during the daily and weekly rate modes, and are sized to cover the principal portion of the purchase price and 40 days of interest at the maximum interest rate of 12%, based upon a year of 365 days. The SBPAs will expire on the scheduled expiration date of Dec. 9, 2013, unless such date is extended, or upon the occurrence of certain events of termination as specified in the respective SBPAs.
The short-term ratings will expire upon any expiration or termination of the SBPAs. The remarketing agent for the series 2008A bonds is Citigroup Global Markets Inc. and remarketing agent for the series 2008B bonds is BB&T Capital Markets, a division of Scott & Stringfellow, Inc. The bonds are expected to be delivered on or about Dec. 9, 2008.
The bonds will initially bear interest at the weekly rate, but may be converted to a daily, long-term or bond interest term mode. While bonds bear interest in the weekly rate mode, interest is payable on the first Wednesday of each month, commencing Jan. 7, 2009. During the daily and weekly interest rate modes, holders have the option to tender their bonds on any business day, following the required prior notice to the tender agent, trustee and remarketing agent. The bonds are subject to mandatory tender: (1) during bond interest term mode, on the first day following the last day of each bond interest term, (2) on the first day of each interest rate period, (3) on the fifth business day preceding any expiration or termination of the SBPA without replacement or upon termination following receipt of notice of an event of default under the SBPA, and (4) on the date of replacement of the SBPA, (5) during the daily or weekly rate periods, on any business day designated by FirstHealth of the Carolinas, Inc. with the consent of the remarketing agent and SBPA provider. Optional and mandatory redemption provisions also apply to the bonds pursuant to the terms of the respective trust agreement.
The proceeds of the series 2008 revenue refunding bonds will be used to refund the North Carolina Medical Care Commission's hospital revenue bonds (FirstHealth of the Carolinas Project) series 1998 and series 2003.
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.