Marquette General Hospital, the largest hospital in Michigan’s Upper Peninsula, recently converted $37 million of 2006 auction-rate securities to weekly rate variable-rate demand obligations.

In advance of the sale, Moody’s Investors Service cut the system two notches to Baa3 from Baa1 and affirmed its negative outlook. The two-notch downgrade is due to the decline in the hospital’s financial performance as well as risks to its liquidity. It would lose its investment-grade status if downgraded again.

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