The 'AAA' rating on North Carolina Medical Care Commission's health care facility revenue bonds, issued for the McDowell Nursing Center Project, is based on the following factors: Extremely strong credit quality of the GNMA Permanent Loan Certificate (PLC), anticipated to be delivered on or prior to July 31, 2002; Investments commensurate with a 'AAA' rating; Cash-flow projections indicating the sufficiency of revenues to pay fees and debt service on all bonds until final maturity; and Sufficiency of excess assets to cover various credit and liquidity shortfalls such as reinvestment risk, negative arbitrage, and the GNMA payment lag. Bond proceeds will be used to finance the acquisition of a 140-bed skilled nursing facility in Nebo, N.C. The mortgage on the project
