Fitch to Downgrade University of Chicago Medical Center Series 2011B VRDBs to 'A/F1'
OREANDA-NEWS. On the effective date of May 5, 2016, Fitch Ratings will downgrade the ratings to 'A/F1' from 'AA/F1+' for the $46,250,000 Illinois Finance Authority variable rate demand revenue bonds, series 2011B (University of Chicago Medical Center). The Rating Outlook for the long-term rating is Stable.
The rating action is in connection with: (i) the substitution of the irrevocable direct-pay letter of credit (LOC) previously provided by Wells Fargo Bank, N.A. (rated 'AA/F1+', Stable Outlook) with a substitute LOC to be issued by Sumitomo Mitsui Banking Corporation (rated 'A/F1', Stable Outlook); and (ii) the mandatory tender of the bonds, which will occur on May 5, 2016.
KEY RATING DRIVERS:
On the effective date, the rating will be based on the support provided by the substitute LOC issued by Sumitomo Mitsui Banking Corporation, acting through its New York Branch, which has an initial stated expiration date of May 4, 2021, unless such date is extended or earlier terminated, while the bonds are in the weekly interest rate mode only.
Pursuant to the substitute 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. The substitute LOC provides full and sufficient coverage of principal plus an amount equal to 45 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 Agent for the bonds is Wells Fargo Bank, N.A.
The rating is exclusively tied to the short- and long-term rating that Fitch maintains on the bank providing the substitute LOC and will reflect all changes to that rating.