NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the rating on the Board of Regents of the University of North Texas' (UNT) $100 million tax-exempt and taxable commercial paper (CP) program at 'F1+'.
All legally available revenues, funds and balances of UNT.
KEY RATING DRIVERS
SUFFICIENT LIQUID RESOURCES: The 'F1+' rating is based on UNT's ability to cover the maximum potential liquidity requirement of its CP program by a minimum of 1.25x from internal, highly liquid resources. As of Feb. 28, 2013, UNT's financial resources covered its CP program by 2.68x.
CREDIT STRENGTH OF UNT: Fitch maintains an 'AA' rating with a Stable Outlook on UNT's long-term credit, which primarily reflects a track-record of positive operating performance, favorable student demand, and a manageable debt burden.
MATERIAL DECLINE IN LIQUID INVESTMENTS: The 'F1+' rating could be negatively affected 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 DETERIORATION OF UNT: A decline in UNT's long-term credit quality below the 'A+' rating level could trigger negative rating pressure.
The UNT system consists of the University of North Texas at Denton; University of North Texas at Dallas; University of North Texas Health Science Center at Fort Worth; University of North Texas at Dallas College of Law; and the System Administration. Total headcount enrollment across the system was 39,764 in fall 2012, or 0.7% over the prior year and 10.9% above fall 2008.
The 'F1+' rating is based on the availability of adequate, highly liquid, highly rated securities to cover the liquidity demand presented by UNT's CP program. Under the current Board authorization, CP notes may be issued up to $100 million, of which $75 million is to be tax-exempt and $25 million taxable. Fitch defines the maximum potential liquidity requirement as maximum authorized CP. UNT does not have any outstanding variable-rate demand obligations or any other forms of puttable debt.
As of Feb. 28, 2013, UNT's liquid investments, consisting primarily of money market funds and local government investment pools, totaled approximately $268.2 million (after discounts based on asset type and maturity per Fitch's short-term rating criteria). These liquid assets would cover UNT's full $100 million of authorized taxable and tax-exempt CP ($33.5 million presently outstanding) by a strong 2.68x, exceeding the 1.25x coverage Fitch expects for an 'F1+' rating.
UNT maintains a liquidation procedures plan to manage a failed rollover or marketing. 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', dated June 12, 2012
'Criteria for Assigning Short-Term Ratings Based on Internal Liquidity', dated June 15, 2012
'Fitch rates the Univ. of North Texas' System Series 2012 Rev & Refunding Bonds 'AA'; Outlook Stable
Applicable Criteria and Related Research
Revenue-Supported Rating Criteria
Criteria for Assigning Short-Term Ratings Based on Internal Liquidity