Fitch Rates OR Health & Science Univ $80MM 2009B-1 & B-2 Revs 'AA+/F1+'

Business Wire, June 05, 2009

NEW YORK -- Fitch Ratings has assigned ratings of 'AA /F1 ' to the $60,000,000 Oregon Health and Science University (OHSU) variable rate demand revenue bonds, series 2009B-1 and the $20,000,000 series 2009B-2 (the bonds). The long-term 'AA ' ratings are based jointly on the underlying rating assigned by Fitch to Oregon Health and Science University (OHSU) revenue bonds (currently rated 'A' by Fitch; see Fitch's May 8, 2009 press release available at www.fitchratings.com) and the support provided by an irrevocable, direct-pay letter of credit (LOC) issued by U.S. Bank National Association (currently rated 'AA-/F1 '), securing both series of bonds. The short-term 'F1 ' ratings are based solely on the LOC.

The long-term 'AA ' ratings are based on Fitch's methodology which considers the likelihood of the failure of both a rated obligor and a bank LOC provider. The methodology results in a rating that is up to two notches higher than the stronger of the two credits if the following conditions are met: (1) both entities have a rating of 'A' or higher; (2) the transaction is structured such that payments from both the municipal issuer and the bank are in the flow of funds and both entities would have to fail to perform before the bonds defaulted; and (3) the credit of the bank and the rated obligor have no more than a medium degree of correlation. In this instance, Fitch has determined a low degree of correlation which results in ratings of 'AA /F1 ' for the bonds. If either the underlying rating on the bonds or the rating of U.S. Bank National Association were to be downgraded to 'A-' or lower, this methodology would no longer be applicable and the long-term rating would then reflect the higher of the two ratings.

The bank is obligated to make all payments of principal of and interest on the bonds when due, as well as purchase price for tendered bonds. The rating on the bonds will expire upon the earliest of: June 1, 2012, the initial stated expiration date of the LOC, unless such date is extended; any prior termination of the LOC; or defeasance of the bonds. While the bonds bear interest in the daily or weekly rate mode, the LOC provides full and sufficient coverage of principal plus an amount equal to 34 days of interest computed at a maximum rate of 12%, based on a year of 365/366 days, and purchase price for tendered bonds. The remarketing agents are Merrill Lynch & Co for the 2009 B-1 bonds and Morgan Stanley & Co for the 2009 B-2 bonds. The bonds are expected to be available for delivery on or about June 17, 2009.

The bonds will bear interest in a weekly rate mode, but may be converted to a daily rate, commercial paper rate, term rate, fixed rate, indexed rate, or stepped coupon rate mode. While bonds bear interest in the daily or weekly rate modes, interest is payable on the first business day of each calendar month, commencing July 1, 2009, and bondholders have the option to tender their bonds on any business day, with the requisite notice. The bonds are subject to mandatory tender upon the expiration, termination, or substitution of the LOC and upon conversion of the interest rate mode. The bonds are also subject to optional and mandatory sinking fund redemptions.

Bond proceeds will be used to refund outstanding OHSU revenue bonds, repay a line of credit, and fund capital project needs.

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.