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Who's up and who's down

Children's Hospital of the King's Daughters, Norfolk, VA
Outlook: Stable
Affected debt: $78 million
Agency: Moody's Investors Service
Remarks: Moody's has downgraded the long-term rating to Aa3 from Aa2 and has affirmed VMIG 1 short-term rating of the Virginia Small Business Financing Authority Variable Rate Tax Exempt Revenue and Refunding Bonds (Children's Hospital of the King's Daughters, Incorporated Project) Series 2006 in conjunction with the substitution of the current letter of credit securing the bonds and provided by Wachovia Bank, N.A., with a direct-pay letter of credit to be provided by Bank of America, N.A. The structure of this transaction isn't supported by Moody's, thus the rating for the bonds are based on (i) the bank letter of credit, (ii) the structure and legal protections of the transaction, and (iii) Moody's evaluation of the credit quality of the bank.

Lahey Clinic Medical Center, Burlington, MA
Outlook: Stable
Affected debt: $185 million
Agency: Standard and Poor's
Remarks: The shift from an A rating to an A+ rating reflects Lahey's strong and unique business position as a physician-led integrated multispecialty group practice and hospital. Despite the competition of Boston's academic medical centers, Lahey has maintained a dominant position in its primary and secondary market areas, reflected by its improved level of financial performance through unaudited fiscal 2009 and continued utilization growth across most inpatient and outpatient service lines.

Newport (RI) Hospital
Outlook: Negative
Affected debt: $24.9 million
Agency: Standard and Poor's
Remarks: The hospital's rating remains an A; however, the outlook revision from stable to negative is based on concerns over an unexpected 50% increase in operating losses in 2009 to $5.6 million from $3.8 million and negative net income. Factors supporting the A rating include the assessment of the hospital's strong balance sheet characterized by excellent liquidity and low leverage, which declined further this year with Newport's repayment of its $6 million series 2004 bonds.

Karen Minich-Pourshadi

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