Fitch Rates Maine Health & Higher Educational Facilities Authority's Revs 'AA'; Outlook Stable

CHICAGO--(Business Wire)--
Fitch Ratings has assigned an 'AA' rating to the $90 million Maine Health and
Higher Educational Facilities Authority (the authority) revenue bonds, series
2009A. In addition, Fitch affirms its rating on approximately $1.4 billion of
the authority's outstanding reserve fund resolution bonds at 'AA'. The series
2009A bonds are scheduled to price via negotiation during the week of Nov. 16,
2009. Bond proceeds will be used to fund or refinance loans to four nonprofit
educational, medical and rehabilitation institutions in Maine. The Rating
Outlook is Stable.

The 'AA' rating and Stable Outlook reflect the diversity, low credit risk, and
security of loans within the authority's loan pool, a debt service reserve
funded at maximum annual debt service (MADS) and backed by the state's moral
obligation, a state-aid intercept mechanism additionally backing loan
repayments, and a sizable supplemental operating fund. Most of the state's
eligible health care and higher education institutions use the authority as
their primary borrowing vehicle because it offers participants the lowest cost
of capital.

The authority's loan pool consists of 66 borrowers, with moderate
single-borrower concentration; the largest, the Maine Health System, represents
15% of the total outstanding portfolio, and the top 10 borrowers account for
approximately 63% of the outstanding loan balance. Approximately 43% of the
outstanding loan balances are to hospitals; 13% to higher education
institutions; with the remaining 44% outstanding loans spread among mental
health facilities, nursing homes, community care retirement communities and
social service organizations.

Borrowers in the pool generally do not have public ratings. Among the largest
eight borrowers, Fitch estimates that one would be rated in the 'AA' category,
three in the 'A' category, and four in the 'BBB' category. In addition to a
senior lien on gross revenues and a mortgage on most property and/or financed
projects, the loans are backed by a state-aid intercept.

A debt service reserve for all parity debt is funded by bond proceeds at 100% of
MADS. After this issue, the debt service reserve will total $118.3 million, or
9% of total bond principal outstanding. The debt service reserve is also backed
by a state moral obligation make-up provision if it falls below MADS. Neither
the intercept nor the reserve replenishment has ever been utilized. The reserves
are invested in highly rated tax-exempt municipal bonds, money market accounts
and investment agreements.

The operating fund balance, while not pledged, totals approximately $38 million
and may be used instead of the debt service reserve, in the event of loan
delinquencies. The operating fund, which is primarily invested in U.S. treasury
or agency securities, has grown steadily from administrative fees collected from
borrowers. Combined, debt service reserves and operating fund balances will
total $156.3 million, or approximately 12% of bond principal outstanding.

Fitch analyzes the default tolerance of the authority's portfolio using a stress
test that considers loan credit quality, single-risk concentration, debt service
reserves and operating funds and loan payments. Fitch discounts in its analysis
approximately $15.3 million of reserves that are held in non-collateralized
investment agreements with providers rated below 'AA'. However, the authority's
reserves and operating funds are sufficient to pay bondholders if scheduled loan
repayments fall short by as much as 30% for four consecutive years, even if the
lower quality investment agreements fail to perform and no action is taken by
the state to replenish the reserve fund.

Additional information is available at 'www.fitchratings.com'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE '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
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Fitch Ratings
Adrienne M. Booker, 312-368-5471, Chicago
David Litvack, 212-908-0593, New York
or
Media Relations:
Cindy Stoller, 212-908-0526, New York
Email: cindy.stoller@fitchratings.com

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