University Of Rochester, NY's 2015 Revenue
Bonds Rated 'AA-'
Primary Credit Analyst:
Ken Rodgers, New York (1) 212-438-2087; [email protected]
Secondary Contact:
Carolyn McLean, New York (1) 212-438-2383; [email protected]
NEW YORK (Standard & Poor's) June 8, 2015--Standard & Poor's Ratings Services
assigned its 'AA-' rating to Monroe County Industrial Development Corp.,
N.Y.'s $302 million of various series of 2015 revenue bonds issued for the
University of Rochester. In addition, Standard & Poor's affirmed its 'AA-'
rating on various existing series of bonds issued for the university by the
development corporation and the New York State Dormitory Authority. The
outlook is stable for all issues.
Standard & Poor's also affirmed its 'AAA/A-1' rating on the series 2003A and
2003C bonds, supported by a letter of credit (LOC) from JPMorgan Chase Bank
N.A., also issued by the authority for the university, based on the
application of joint criteria with low correlation. The long-term component of
the rating reflects the joint application of our long-term 'A+' rating on
JPMorgan Chase and 'AA-' underlying SPUR on the university. The short-term
component of the rating reflects our 'A-1' rating on JPMorgan Chase. The LOC
expires March 3, 2017.
Standard & Poor's also affirmed its 'AAA/A-1+' rating on the series 2003B
bonds, supported by an LOC from HSBC Bank USA N.A., also issued by the
authority, based on the application of joint criteria with low correlation.
The rating's long-term component reflects the joint application of our
long-term 'AA-' rating on HSBC Bank USA and 'AA-' SPUR on the university. The
short-term component reflects our 'A-1+' rating on the bank. The LOC expires
Sept. 3, 2018.
Standard & Poor's also affirmed its 'AAA/A-1+' rating on the series 2006A1 and
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University Of Rochester, NY's 2015 Revenue Bonds Rated 'AA-'
B1 bonds, supported by an LOC from Wells Fargo Bank N.A. , issued by the
authority, based on the application of joint criteria with low correlation.
The rating's long-term component reflects the joint application of our
long-term 'AA-' rating on Wells Fargo Bank and 'AA-' SPUR on the university.
The short-term component reflects our 'A-1+' rating on the bank. The LOC
expires Aug. 14, 2015. We understand the university is currently negotiating
the terms of a renewal for the LOC with a replacement bank and anticipates
concluding those negotiations in the next 30 days.
Total long-term debt outstanding at fiscal year-end 2014 (June 30) is $1.13
billion. We understand about $130 million of bond proceeds from the current
issuance will fund various needed academic buildings and other renovation
projects while the majority of the remaining bond proceeds will be used to
refund various outstanding bond issues for debt service savings.
"The rating continues to reflect our assessment of the university's strong
student demand and positive enrollment trend; very strong financial
performance for each of the past two fiscal years, which is expecteded for the
current fiscal year's end on June 30 and next year); sound governance and
management; good revenue diversity, including a well-known medical school and
market leading academic medical center; adequate financial resources; low debt
burden; and successful fundraising with a strong endowment," said Standard &
Poor's credit analyst Ken Rodgers. "Financial resource ratios, however, trail
medians for the rating category and the university's research grants and
contracts have decreased to about 10% of adjusted operating revenue in fiscal
2014 from 15% three years earlier, with an indication there has been a slight
further decline in the current year."
A general obligation pledge under the loan agreement with the authorities
secures the bonds.
The stable outlook reflects our expectation that the university's enterprise
profile will remain strong and its financial profile will further strengthen
as its capital needs wind down from recent historical highs and it realizes
the benefit of stronger financial resources as debt begins to recede. These
beliefs are premised upon continued strong enrollment and sound management of
the university, while financial performance will remain at or near current
levels with any additional debt issuance commensurate with improved financial
resources. We could consider a negative outlook within the next one to two
years if additional debt exceeds our expectations, financial resources fail to
increase, or operating results decline. We believe a positive outlook is
somewhat unlikely during this period, given financial resources that trail
median ratios for the rating and the possibility for additional debt.
Founded in 1850, the university is an independent, nonprofit institution of
higher education, research, and health care in Rochester, N.Y.
RELATED CRITERIA AND RESEARCH
Related Criteria
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University Of Rochester, NY's 2015 Revenue Bonds Rated 'AA-'
• USPF Criteria: Contingent Liquidity Risks, March 5, 2012
• USPF Criteria: Higher Education, June 19, 2007
• USPF Criteria: Municipal Applications For Joint Support Criteria, June
25, 2007
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