OREANDA-NEWS. S&P Global Ratings assigned its 'AA-' long-term rating to California Health Facilities Financing Authority's $5.7 million series 2016 insured refunding revenue bonds issued for Petaluma Health Center Inc. (PHC). The outlook is stable.

"The long-term rating is based on our assessment of insurance from the California Health Facilities Construction Loan Insurance Program," said S&P Global Ratings analyst Patrick Zagar. The bonds are guaranteed by the program's health facilities construction loan insurance fund (HFCLIF), which is funded by upfront fees from new issuers, interest income on the fund, and a one-time insurance premium charged to borrowers.

"The ultimate backing for the program, however, is the full faith and credit of California," added Mr. Zagar. In the event of a shortfall in the HFCLIF, the state will issue debentures on par with the state's general obligation (GO) debt at the same rate of interest as the bonds they replace, and continue to make regularly scheduled debt service payments. Therefore, debt insured by the Cal-Mortgage program is rated on par with the GO rating on California.

We understand PHC will use bond proceeds to advance refund its series 2010 debt, which is also insured by Cal-Mortgage. The 2010 bonds financed the purchase and renovation of a 55,000-square-foot building that PHC now operates as a community health clinic.

The stable outlook is based on our GO debt rating on California. Because we rate the Cal-Mortgage insurance program on par with the GO rating on the state, any action affecting the state will directly affect the rating on the Cal-Mortgage program and its participants.

PHC is a federally qualified health center that provides primary and preventive health care services to the residents of the Petaluma and Rohnert Park, a medically underserved area of Sonoma County. PHC had over 117,000 total visits in fiscal 2015. The city of Petaluma is about 40 miles north of San Francisco.