Fitch Rates Catholic Health Initiatives 2008 Bonds 'AA/F1+'; Outlook Stable

Business Wire, March 24, 2008

NEW YORK -- Fitch assigns a rating of 'AA' to the approximately $369.7 million of series 2008 bonds to be issued on behalf of Catholic Health Initiatives (CHI) by various issuers. Fitch has also assigned an 'F1 ' short-term rating on approximately $289.4 million of series 2007 & 2008 variable rate demand bonds supported by CHI's internal liquidity. In addition, Fitch affirms its 'AA' rating on $2.7 billion of outstanding bonds issued on behalf of Catholic Health Initiatives, and its 'F1 ' short term rating, based on CHI's internal liquidity, to the approximately $407 million outstanding variable rate demand bonds. For certain bond series, this will be an underlying rating. The Rating Outlook is Stable.

Bond proceeds will be used to current refund certain series of auction rate securities issued in 2006 and 2007 which were insured by FGIC (whose claim paying ability is 'AA'). This refunding is one of a series of restructuring strategies employed by CHI for its portfolio of auction rate debt of approximately $1.1 billion which is either unenhanced or insured by either FSA, FGIC or MBIA. CHI will employ various remediation strategies including refunding with mandatory tender bonds supported by internal liquidity, refunding with variable rate debt with weekly put options, or modal conversion.

The 'AA' rating is supported by CHI's superior management practices, continued solid profitability, healthy liquidity, and strong revenue and profit dispersion, which provide the system with ample financial flexibility and strong market access.

The 'F1 ' rating reflects CHI's solid liquidity position and sound internal procedures that ensure timely access and transfer of funds in the event of a failed remarketing. Unrestricted cash and investments of the CHI Reporting Group at December 31, 2007 was approximately $4.9 billion. CHI provides self liquidity on $698 million of outstanding variable rate debt of the total $2.7 billion of outstanding debt.

The Stable Rating Outlook is based on Fitch's belief that CHI will maintain its solid profit margins and financial flexibility.

CHI is the second largest not for profit integrated health care delivery system in the U.S. The system sponsors market-based organizations (MBOs) in 19 states, with 73 acute care hospitals, including 21 critical access hospitals, 42 long term care, assisted living and residential facilities, two community health service organizations and two accredited nursing colleges. The system produced $8.3 billion in total revenues in 2007. CHI covenants to provide quarterly and annual disclosure to bondholders. Disclosure has been excellent, including detailed statements with management discussion and analysis which are available at CHI's website, www.catholichealthinitiatives.net. For more information regarding CHI, please refer to Fitch research report dated November 6, 2007, 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.