CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed the Short-Term Ratings at 'F1+' on the following Illinois Finance Authority bonds based upon self-liquidity provided by Advocate:
--$21.975 million put bonds series 2008C-3B;
--$70 million variable rate demand bonds (windows mode) series 2011B.
In addition, Fitch has withdrawn the 'F1+' rating on the following Illinois Health Facilities Authority bonds as they have been remarketed to maturity:
--$17.4 million put bonds series 2003A;
--$16.7 million put bonds series 2003C.
KEY RATING DRIVERS
SOLID CREDIT PROFILE: Fitch rates Advocate's long-term obligations at 'AA'/Stable Outlook. The Long-Term Rating reflects Advocate's light debt burden, ample liquidity solid market position, and strong clinical integration. The organization's coverage continues to be strong due to its moderate debt burden.
LIQUID RESOURCES AVAILABLE FOR UNREMARKETED PUTS: The 'F1+' rating reflects the adequacy of Advocate's eligible cash, investments, and dedicated lines of credit to fund any un-remarketed puts on its variable rate demand bonds. Such resources include cash; highly liquid, highly rated investments; and dedicated bank liquidity facilities. Investments are discounted based on Fitch's criteria. At June 30, 2016 Advocate maintained highly liquid resources to cover maximum mandatory put exposure on any given date in excess of Fitch's criteria of 1.25x.
RATING SENSITIVITIES
MAINTENANCE OF ADEQUATE LIQUIDITY: Fitch expects Advocate to maintain adequate internal liquid resources to cover its total put exposure in excess of 1.25x to maintain the Short-Term 'F1+' Rating.
CREDIT PROFILE
Advocate is an integrated health care system serving the Chicago metropolitan area and central Illinois. The system includes 12 acute care hospitals and a children's hospital (totaling approximately 3,600 licensed beds), several large physician groups, primary and specialty physician services, home health, hospice care, and outpatient centers serving the Chicago metropolitan area and central Illinois. Total revenues in fiscal 2015 (Dec. 31 fiscal year end) were $5.4 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, Advocate Condell Medical Center, and Advocate Sherman Hospital. As of Dec. 31, 2015 the obligated group represented approximately 92% of consolidated assets and 94% of total operating revenues of the consolidated system.
Advocate and NorthShore University Health System (not rated by Fitch) signed a definitive affiliation agreement in Sept. 2014 to merge, which Fitch views positively as the merger would likely support further operating efficiencies across the organization. Fitch will assess any rating impact if and when the transaction finalizes.
'F1+' SHORT-TERM LIQUIDITY RATING
The 'F1+' rating reflects the adequacy of Advocate's eligible cash, investments, and dedicated lines of credit to fund any un-remarketed puts on the $92 million of variable rate demand bonds supported by self-liquidity. Advocate's eligible liquid resources available to its maximum tender exposure in any given week exceeds Fitch's 'F1+' threshold of 1.25x. Fitch received a written internal procedures letter from the organization, which outlines internal policies to meet any funding requirements.
For more information on Advocate Health Care, see Fitch's press release 'Fitch Rates Advocate Health Care's (IL) Series 2015B Revs 'AA'; Outlook Stable' dated Oct. 9, 2015 available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria
Rating U.S. Public Finance Short-Term Debt (pub. 17 Nov 2015)
https://www.fitchratings.com/site/re/873508
Revenue-Supported Rating Criteria (pub. 16 Jun 2014)
https://www.fitchratings.com/site/re/750012
U.S. Nonprofit Hospitals and Health Systems Rating Criteria (pub. 09 Jun 2015)
https://www.fitchratings.com/site/re/866807
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1012715
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1012715
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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