MOODY'S ASSIGNS Baa2 RATING TO CORCORAN HEALTHCARE DISTRICT'S GO BONDS

Posted on: December 10, 2009, 8:36 pm

NEW YORK, Dec 10, 2009 -- Moody's Investors Service has assigned a Baa2 rating to the Corcoran Healthcare District's General Obligation (GO) Bonds 2002 Election, 2009 Series B. Moody's had originally assigned a Baa2 rating to the district's proposed bond issuance in August, but we withdrew the rating due to a long delay in the sale of the bonds. The district now expects to price the bonds on December 14. The rating reflects the district's small tax base, the hospital's relatively small revenue base, and the district's relatively weak but stable financial position. The rating also incorporates our positive view of the district's modest direct debt burden, and the absence of direct competition in the hospital's immediate service area. The district's liquidity remains thin at an estimated 21 days cash on hand in fiscal 2010. This is a significant decline from an issuer-estimated 39 days cash on hand at the end of fiscal 2009 and attributed to the state's deferment of payments to the district for medical services performed on inmates from the state's two prisons located in the city of Corcoran. Moody's notes the district expects to receive cash payments from the state in the next one to two months and believes the decline is temporary. Furthermore, the district received a $500,000 short-term loan from the city of Corcoran in fiscal 2009, which it fully repaid, and has received a verbal commitment from Kings County and the city for a $1 million short-term loan in fiscal 2010 to manage its cash flow. The district expects that the loan will be secured by the end of December. Given the expectation of near-term receipt of state payments, an operating budget that is currently in-line with its projections from the time of adoption, and the verbal commitment for additional liquidity provided by the county and city, Moody's expects the district's finances will remain relatively stable and is favorable for the Baa2 rating reinstatement. Please refer to Moody's New Issue Report dated August 24, 2009, for more detailed analysis of the district's GO bonds...

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