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Fitch Affirms Mississippi State University's (MS) Short-Term Rating at 'F1+'NEW YORK --(Business Wire)-- Fitch Ratings has affirmed the 'F1+' rating on the Mississippi State University Educational Building Corporation (MSUEBC or the corporation) taxable and tax-exempt commercial paper (CP) program on behalf of Mississippi State University (MSU). The program's maximum authorized limit is $50 million. Draws under the program will provide short-term financing of improvements to MSU's football stadium and other capital projects, currently refund certain obligations of the corporation, and redeem maturing commercial paper. SECURITY The corporation's CP is secured by designated revenues generated by the eight academic institutions comprising the State Institutions of Higher Learning (IHL). Designated revenues include: net tuition, fees and auxiliary receipts, sales and services revenues, other operating revenues, state appropriations, and unrestricted net assets. MSU's high quality, highly liquid resources will provide the primary liquidity support for a failed rollover of CP. However, as noted in the indenture, IHL (rated 'AA' with a Stable Outlook by Fitch) remains ultimately responsible for CP payment. KEY RATING DRIVERS CREDIT STRENGTH OF IHL: Fitch maintains an 'AA' rating with a Stable Outlook on IHL's long-term credit, which primarily reflects a track-record of positive operating performance, a satisfactory level of unencumbered resources relative to operating expenses and long-term debt, and a manageable debt burden. SUFFICIENT LIQUID RESOURCES: The 'F1+' rating is based on IHL's ability to cover the maximum potential liquidity requirement associated with MSU's CP program by a minimum of 1.25x. Further comfort is provided MSU's access to internal, highly liquid resources, which covered the maximum authorization by a sound 2.49x (based on data from March 31, 2013). RATING SENSITIVITY MATERIAL DECLINE IN LIQUID INVESTMENTS: The 'F1+' rating could be negatively impacted by a decline in available resources to a level that resulted in less than the minimum 1.25x coverage required under Fitch's Criteria for Assignment Short-Term Ratings Based on Self Liquidity. CREDIT PROFILE Founded in 1944, the IHL represents the state's eight academic institutions: University of Mississippi (UM), Alcorn State University, Delta State University, Jackson State University, Mississippi State University (MSU), Mississippi University for Women, Mississippi Valley State University, and USM. It also includes the University of Mississippi Medical Center, which is part of UM. Enrollment at IHL member institutions totaled 81,022 for the fall 2012 academic term, or 0.6% over fall 2011 and 13.8% above fall 2008 levls. As a percentage of total headcount enrollment, MSU is the second largest institution in the system, regularly accounting for approximately one-fourth of IHL's enrollment base. Total headcount enrollment at MSU stood at 20,365 in fall 2012. SUFFICIENT LIQUID RESOURCES The 'F1+' rating is based on the availability of adequate, highly liquid, highly rated securities to cover the maximum potential demand obligations presented by MSU's CP program ($50 million). MSU does not have any outstanding variable rate demand obligations or any other forms of puttable debt. Further, no other member institution within IHL maintains a CP program and all of IHL's outstanding bonds are in fixed-rate mode. IHL's most highly liquid financial resources (consisting of cash, U.S. government agency obligations, and U.S. treasury obligations) totaled approximately $705.2 million on June 30, 2012, which is well in excess of the $50 million maximum authorization associated with MSU's CP program($22 million outstanding as of April 1, 2013). Moreover, as of March 31, 2013, MSU's internal liquid investments, consisting primarily of cash and U.S. treasury and agency debt, totaled approximately $124.5 million (after discounts based on asset type and maturity per Fitch's short-term rating criteria). These liquid assets covered the maximum authorization by a sound 2.49x, exceeding the 1.25x coverage Fitch expects for an 'F1+' rating. MSU maintains a liquidation procedures plan to manage a failed roll over or remarketing. The plan delineates the specific timing sequences, procedures for liquidation, and authorized personnel responsible for these steps. Fitch views favorably the presence of such a plan as it reflects management's commitment to the timely redemption of maturing CP notes. Additional information is available at 'www.fitchratings.com' Applicable Criteria and Related Research: --'Revenue Supported Rating Criteria' (June 12, 2012); --'Criteria for Assigning Short-Term Ratings Based on Internal Liquidity' (June 15, 2012); --'Fitch Rates University of Southern Mississippi Educ Bldg Corp Revs 'AA'; Outlook Stable' (April 18, 2013). Applicable Criteria and Related Research Revenue-Supported Rating Criteria http://www.fitchratings.com/creditdesk/reports/report_frame.cfm rpt_id=681015 Criteria for Assigning Short-Term Ratings Based on Internal Liquidity http://www.fitchratings.com/creditdesk/reports/report_frame.cfm rpt_id=681822 Additional Disclosure Solicitation Status http://www.fitchratings.com/gws/en/disclosure/solicitation pr_id=789936 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. |
