The bonds are expected to sell via negotiated sale
The Rating Outlook is Stable.
The bonds will be insured by the State of
KEY RATING DRIVERS
STATE ENHANCEMENT LINKED TO GO RATING: The rating is based on the support provided by the
SEVERAL LAYERS OF PROTECTION: The rating is ultimately linked to the state treasurer's ability to issue debentures on parity with state GO bonds. Prior to that, several layers of protection ensure timely bondholder payment in the event a program participant defaults, and provides ample time to ensure bondholder payment.
RECENT STATE GO UPGRADE: Institutionalized changes to fiscal operations in recent years, when combined with the ongoing economic and revenue recovery, have enabled the state to materially improve its financial position, enhancing its ability to address future fiscal challenges. Fitch upgraded the state's GO rating to 'AA-' from 'A+', on
PROGRAM CHANGES OR SHIFTS IN STATE CREDIT QUALITY: The rating is sensitive to changes to existing Cal-Mortgage program parameters, or to changes in the state's GO bond rating, to which this rating is linked.
Cal-Mortgage is a division of the State of California OSHPD. Cal-Mortgage's mission is to improve access to capital for qualifying health care facilities without cost to taxpayers. The agency primarily guarantees debt issued on behalf of nonrated and below-investment grade health care institutions that demonstrate community need. Bond proceeds will be used by
The Cal-Mortgage program was originally authorized by voters in 1968. As of
In the event of a default by an insured borrower, debt service reserves and the HFCLIF balance are available to bondholders. If defaults on insured loans ever caused the HFCLIF and debt service reserves to be depleted, statutes and transaction documents require the state treasurer to issue debentures on parity with the state's GO bonds in the amount of principal and interest due but not paid, at a payment schedule and coupon rate identical to those of the bonds associated with the defaulted loan. These provisions support a rating on Cal-Mortgage equal to that of the state's GO bonds, currently rated 'AA-', with a Stable Outlook by Fitch.
For further information on the
Additional information is available at 'www.fitchratings.com'.
In addition to the sources of information identified in the applicable criteria specified below, this action was informed by information from Lumesis and
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Source: Fitch Ratings