NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned a 'AA-'/'F1+' rating to the $80,000,000 ($70,490,000 currently outstanding) Rutgers, The State University, general obligation bonds, series 2009G. The Rating Outlook is Stable for the long-term rating.
KEY RATING DRIVERS:
The 'AA-' long-term rating and Stable Outlook are based on the credit quality of Rutgers University. For more information on the long-term rating, see Fitch's press release dated July 29, 2015, available on Fitch's web site at www.fitchratings.com'.
The short-term 'F1+' rating is based on the liquidity support provided by US Bank, N.A. (rated 'AA/F1+', Stable Outlook) in the form of a Standby Bond Purchase Agreement (SBPA), which has a stated expiration date of May 4, 2018, during the daily and weekly interest rate modes.
The SBPA provides for the payment of the principal component of purchase price plus an amount equal to 34 days of interest calculated at a maximum rate of 12%, based on a year of 365 days for tendered bonds during the daily and weekly rate mode in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following an optional or mandatory tender. The SBPA will expire on May 4, 2018, the stated expiration date, unless such date is extended, conversion to a mode other than daily or weekly rate; or upon the occurrence of certain events of default which result in a mandatory tender or other termination events related to the credit of the bond obligor which result in an automatic and immediate termination. The remarketing agent for the bonds is Morgan Stanley and Co. Incorporated. Fitch is assigning a rating to these bonds for the first time.
The bonds will be issued in the weekly rate mode, but may be converted to a daily, term, flexible or fixed rate. While bonds bear interest in the daily or weekly rate mode, interest is paid on the first business day of each month. Holders of bonds bearing interest in the daily or weekly rate mode may tender their bonds for purchase with the requisite prior notice. The trustee is obligated to make timely draws on the SBPA to pay purchase price in the event of insufficient remarketing proceeds, and in connection with the expiration or termination of the SBPA, except in the case of the credit-related events permitting immediate termination or suspension of the SBPA.
Funds drawn under the SBPA are held uninvested, and are free from any lien prior to that of the bondholders. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate mode; (2) upon expiration, substitution or termination of the SBPA; and (3) following the receipt of written notice from the bank of an event of default under the SBPA, directing such mandatory tender. Optional and mandatory redemption provisions also apply to the bonds.
RATING SENSITIVITIES
The short-term rating reflects the short-term rating that Fitch maintains on the bank providing liquidity support and will be adjusted upward or downward in conjunction with the short-term rating of the bank and, in some cases, the long-term rating of the bond obligor. The long-term rating is exclusively tied to the creditworthiness of the bond obligor and will reflect all changes to that rating.
Additional information is available at www.fitchratings.com.
Applicable Criteria
Rating Criteria for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support (pub. 28 Jan 2016)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=876837
Revenue-Supported Rating Criteria (pub. 16 Jun 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750012
U.S. College and University Rating Criteria (pub. 12 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748013
U.S. Municipal Structured Finance Criteria (pub. 23 Feb 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=862222
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=999314
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=999314
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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