Fitch Rates King's Daughters Medical Center's (Kentucky) $100MM Ser 2008A&B 'AA+/F1+'

Fitch Ratings assigns a rating of 'AA+/F1+' to the $100,000,000 Kentucky Economic Development Finance Authority Adjustable Rate Medical Center Revenue Improvement Bonds (Ashland Hospital d/b/a King's Daughters Medical Center Project) (the Bonds) consisting of $50,000,000 Series 2008 A and $50,000,000 Series 2008 B.

The long-term rating assigned to the Series 2008 A and 2008 B bonds is based jointly on the long-term rating assigned to the King's Daughters Medical Center (KDMC, currently rated 'A+' by Fitch; see press release dated Sept. 3, on www.fitchratings.com ) and the support provided by two irrevocable, direct-pay letters of credit (LOCs) issued by Branch Banking and Trust Company (BB&T, currently rated 'AA-/F1+' by Fitch) each securing a respective series of bonds. The short-term 'F1+' rating assigned to each series of bonds is based solely on the LOC securing such series.

The long-term 'AA+' rating is 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 obligor 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 that there is a low degree of correlation between the KDMC and BB&T, which results in a long-term rating of 'AA+'. If either the KDMC or a BB&T were to be downgraded to below 'A', this methodology would no longer be applicable to the affected series of bonds and the long-term rating would then reflect the higher of KDMC's rating and the rating of BB&T.

BB&T is obligated to make payments of principal and interest when due as well as purchase price for tendered bonds during the weekly interest rate mode. The rating for the Bonds will expire upon the earliest of: September 24, 2011, the initial expiration date of the LOC, unless such date is extended; any prior termination of the LOC; or defeasance of the bonds. The LOCs provide full coverage of principal plus an amount equal to 35 days' interest at a maximum rate of 12 percent based on a 365-day year, and purchase price for tendered bonds. RBC Capital Markets is the remarketing agent for the bonds. The bonds are expected to be available for delivery on or about September 24.

Each series of bonds will initially bear interest in the weekly interest rate mode, but may be converted, by series, to a one month, three month, six month, one year, five year or fixed rate mode. While in the weekly mode, interest will be paid on the first business day of each month, commencing October 1. While the bonds are in the weekly rate mode, holders may tender bonds on any business day, with seven days prior notice. The bonds are subject to mandatory tender (i) upon conversion to a new interest rate mode; (ii) upon the delivery of an alternate LOC; (iii) upon the expiration of the LOC; and (iv) upon an Event of Default under the Reimbursement Agreement at the direction of BB&T. Optional and mandatory redemption provisions also apply to the bonds

Bond proceeds will be used to (i) finance and or reimburse KDMC for a portion of the costs of acquisition, construction and equipping of improvements to the medical center; (ii) refund outstanding KMDC Series 2004 and Series 2006.

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