Moody’s Investors Service Tuesday upgraded to Aa1/VMIG 1 from Aa3/VMIG 1 the rating assigned to Leesburg revenue bonds issued on behalf of the Villages Regional Hospital project.

The upgrade, affecting $75 million of Series 2006 bonds, was in conjunction with the issuance of a letter of credit from the Bank of Nova Scotia. The bonds also were supported by an insurance policy from Radian Asset Assurance Inc. and a standby bond purchase agreement provided by the bank, which was cancelled when the LOC was issued, said a report by analyst Michael Loughlin.

The new rating reflects the credit quality of the bank and a transaction structure that ensures timely payment of debt service and purchase price to investors, Loughlin said. Moody’s currently rates the Bank of Nova Scotia Aa1 for its long-term bank deposits and Prime-1 for its short-term bank deposits. The rating outlook is stable.

Moody’s rating, based upon the letter of credit, only applies to bonds bearing interest in the weekly-rate mode.

Bond proceeds were used to fund a 138-bed expansion to the existing 60-bed Villages Regional Hospital as well as finance cardiac and catheterization units and other areas. Approximately $5 million was used to refund Series 2001 bonds issued on behalf of the hospital by the Sumter County Industrial Development Authority.

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