Fitch: UMass Ratings Unchanged After Governor's Reorg Proposal.

Business Editors

NEW YORK--(BUSINESS WIRE)--March 3, 2003

Fitch Ratings announces that its underlying rating of 'A+' on certain obligations of the University of Massachusetts (UMass), listed below, is unchanged following the Feb. 26 proposal by the Romney administration to reorganize public higher education in the state. A $400 million offering by the UMass Building Authority (UMBA) is expected to be priced via a syndicate led by Salomon Smith Barney on March 4 and to be rated 'AAA' based on Ambac insurance.

Governor Romney's proposal envisions the creation of four regional administration councils and a reconfigured statewide board of higher education. Specific legislative language has not been introduced. The administration has indicated a plan will be filed to enact these changes in line with the beginning of the 2004 fiscal year. Following filing of the proposal, it would become law within 60 days unless disapproved by a majority of either house of the legislature.

UMass's contractual bond structures generally require the system to pay debt service costs to a conduit issuer from lawfully available funds. With UMBA offerings, for example, the university agrees to make funds available in its expendable fund balance to pay contractual costs that UMBA uses to pay debt service and related expenses. UMBA's enabling act provides that its powers, duties, and existence may not be diminished or impaired in a way that affects adversely the interests and rights of its bondholders.

Press reports indicate that the reception for the governor's proposal has been mixed. If the proposal is enacted, Fitch's primary focus would be the precise security structure put in place to preserve bondholder rights.

Fitch's 'A+' underlying rating for UMass applies to the following issues:

-- UMBA project revenue bonds, senior series 2003-1, expected to be insured by Ambac;

-- Massachusetts Health and Educational Facilities Authority (MHEFA) revenue bonds (University of Massachusetts issue), series B& C (insured: FGIC);

-- MHEFA revenue bonds, Worcester City Campus Corp. (WCCC) issues (UMass projects), series A and B (insured: FGIC);

-- MHEFA revenue bonds, WCCC issues (UMass projects), series C (insured: MBIA);

-- UMBA project revenue bonds, series 2000-2 (insured: Ambac).

Certain other 'commonwealth-guaranteed' UMBA obligations carry an underlying 'AA-' rating by Fitch-based on the credit of the Commonwealth of Massachusetts, rather than the credit of UMass.