OREANDA-NEWS. On the effective date of Oct. 21, 2016, Fitch Ratings will revise the basis of the long-term 'A+' rating and assign a short-term 'F1' rating to the $20,045,000 Massachusetts Health and Educational Facilities Authority revenue bonds, Baystate Medical Center Issue, Series K-1 (2009). The Rating Outlook is Stable for the long-term rating.

KEY RATING DRIVERS:

The long-term 'A+' rating will be based on the higher of the underlying long-term rating assigned to the bonds by Fitch (currently rated 'A+', Stable Outlook), and the long-term rating assigned by Fitch to Barclays Bank PLC (rated 'A/F1', Stable Outlook), the bank providing the irrevocable direct-pay letter of credit (LOC) securing the bonds, which has an initial stated expiration date of Oct. 21, 2020, unless extended or earlier terminated, during the daily and weekly interest rate modes only. The short-term 'F1' rating will be based solely on the LOC.

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. Additionally, the bond obligor is in the flow of funds to make timely payments of principal and interest due upon maturity, acceleration and redemption. The LOC provides full and sufficient coverage of principal plus an amount equal to 54 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 daily or weekly rate modes. The Remarketing Agent for the bonds is Barclays Capital Inc. The bonds are expected to be remarketed on or about Oct. 21, 2016.

The bonds initially bear interest at a daily, but may be converted to a weekly, bond interest term or fixed rate. While bonds bear interest in the daily rate mode, interest payments are on the fifth business day of each month, commencing on Nov. 7, 2016. The trustee is obligated to make timely draws on the LOC to pay principal, interest, and purchase price. Funds drawn under the LOC may be 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 are given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate; (2) upon expiration, substitution or termination of the LOC; (3) following receipt of written notice from the bank of an event of default under the reimbursement agreement, and (4) following receipt of notice from the bank that the interest component will not be reinstated directing such mandatory tender. The bank has the option of directing an acceleration rather than a mandatory tender upon an event of default under the reimbursement agreement or non-reinstatement of LOC interest. Optional and mandatory redemption provisions also apply to the bonds. There are no provisions for the issuance of additional bonds.ing.

Bond proceeds were used to finance the project, acquisition and installation of capital equipment and renovations to existing facilities of the Medical Center and other routine capital expenditures.

RATING SENSITIVITIES

The long-term rating is tied to the Fitch long-term rating assigned to the bonds and the long-term rating that Fitch maintains on the bank providing the LOC. Changes to one or both of these ratings may affect the long-term rating assigned to the bonds.

The short-term rating is exclusively tied to the short-term rating that Fitch maintains on the bank providing the LOC and will reflect all changes to that rat