Fitch Rates Catholic Health Initiatives' $881MM Taxable CP 'F1+'

Business Wire, Dec 18, 2006

NEW YORK -- Fitch Ratings has assigned an 'F1 ' short-term rating to Catholic Health Initiatives' (CHI) $881 million taxable commercial paper (CP) note program consisting of $440.5 million Series A Notes and $440.5 million Series B Notes. JP Morgan is the CP Dealer for the Series A Notes and UBS Securities is the CP dealer for the Series B Notes. The CP notes will be secured by CHI's internal liquidity and will be used to defease certain outstanding bank loans of the system. The term of the CP will be 270 days or less. Both series of bonds are expected to price on Dec. 19th, 2006.

CHI has identified a 364 day line of credit of $881 million to provide liquidity for the outstanding self liquidity backed obligations. The line of credit is a syndicate of six banks all with short term ratings of 'F1 '. The long term ratings of the banks in the syndicate are all 'A ' or higher.

CHI has approximately $410.7 million of unenhanced weekly variable-rate demand outstanding. At October 31, 2006 CHI had approximately $2.9 billion of unrestricted cash and investments consisting of 45% equities, 35% fixed income, and 20% alternative investments. Of the fixed income instruments approximately 28% (approximately $284 million) were invested in high liquid treasury and agency securities. In addition to the CP outstanding, CHI has approximately $410 million of putable weekly VRDO's that are subject to optional tender with no less than seven days notice, allowing CHI to liquidate sufficient assets to cover a failed remarketing.

In addition to the dedicated line of credit and investments, CHI has also identified reverse repurchase agreements, a line of credit of $100 million, and remarketing agreements as additional sources in the unlikely event of an unremarketed put. Additionally, Fitch has reviewed CHI's procedures that are in place in the unlikely event of an unremarketed put and believes they would result in a timely flow of funds without disrupting normal operations or the provision of services.

For more information on the long and short term ratings for CHI see Fitch's report dated Oct. 24, 2006 available on the Fitch Ratings web site www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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 Conduct' section of this site.