Fitch Assigns 'AA-' Rating for Texas Christian University.
NEW YORK New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings
An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. assigns an 'AA-' underlying rating to approximately $75 million Red River Education Finance Corporation higher education higher education
Study beyond the level of secondary education. Institutions of higher education include not only colleges and universities but also professional schools in such fields as law, theology, medicine, business, music, and art. revenue bonds (Texas Christian University Texas Christian University, at Fort Worth; Christian Church (Disciples of Christ); coeducational; opened 1873 at Thorp Spring, chartered 1874 as Add Ran Male and Female College. It assumed its present name in 1902 and moved to Fort Worth in 1910. (TCU (Transmission Control Unit) A communications control unit controlled by the computer that does not execute internally stored programs. Contrast with front end processor, which executes its own instructions. ) Project), series 2005. Fitch also affirms the 'AA-' and 'F1+' ratings on the outstanding parity bonds listed below. The bonds are scheduled to sell on or about March 21 through Lehman Brothers Lehman Brothers Holdings Inc. (NYSE: LEH), founded in 1850, is a diversified, global financial services firm. It is a participant in investment banking, equity and fixed income sales, research and trading, investment management, private equity, and private banking. and JP Morgan. Bond proceeds will be used to refund a portion of outstanding series 1997 parity bonds. The Rating Outlook is Stable.
The long-term 'AA-' rating reflects TCU's stable enrollment, large endowment, and substantial liquidity. Total university enrollment was 8,632 for fall 2004, which represents a 4.3% increase from the previous fall semester, and a 7.2% growth since fall 2001, when a 15% increase in tuition was implemented. Each subsequent year has had an 8%-9% increase. The endowment, $807 million as of May 31, 2004, is significant and represents an endowment per full-time equivalent Full-time equivalent (FTE) is a way to measure a worker's involvement in a project, or a student's enrollment at an educational institution. An FTE of 1.0 means that the person is equivalent to a full-time worker, while an FTE of 0.5 signals that the worker is only half-time. student of $101,181. Available funds, which include unrestricted and temporarily restricted cash and investments, are significant and provide strong liquidity for TCU. As of May 31, 2004, available funds were $617.6 million and would cover slightly over three years of fiscal 2004 unrestricted expenses.
Fitch's major concerns are TCU's limited revenue diversity and the December 2004 accreditation warning by the Southern Association of Colleges and Schools The Southern Association of Colleges and Schools (SACS) is a regional educational accreditation agency for over 13,000 public and private educational institutions ranging from preschool to college level in the southern United States. (SACS). Tuition, fees and student-generated revenues through auxiliary services represent approximately 75% of TCU's fiscal 2004 unrestricted revenues. The concern over the heavy reliance is partially mitigated by TCU's ability to implement substantial increases in tuition and fees over the past five years while consistently growing enrollment. For fall 2005, the TCU board has approved a 7.8% increase in tuition and fees which would increase to $21,280 from $19,700.
On Dec. 6, 2004, the Commission on Colleges Southern Association of Colleges and Schools placed TCU's accreditation status on warning. The action was taken in response to non-compliance with SACS principles primarily regarding TCU's board of trustee processes. TCU's academic programs are not in question. The commission will be reviewed for compliance in December 2005. TCU reports that the trustees and administration are resolving the issues with SACS and will demonstrate full compliance before the December 2005 deadline. Fitch believes that failure to maintain accreditation would have a negative impact on the rating.
TCU has both outstanding long-term fixed-rate bonds and $80 million of variable-rate demand bonds (VRDBs), series 2000 and 2001, for which it provides internal liquidity in the event of a failed remarketing. Fitch has an outstanding short-term rating of 'F1+' and long-term 'AA-' rating on the series 2000 VRDBs. Fitch has only a long-term 'AA-' rating on the series 2001 VRDBs, since they have a term rate period of five years. TCU has identified $186.4 million as of Dec. 31, 2004, which would provide liquidity for TCU's VRDB VRDB
See: Variable-rated demand bond exposure and provides ample coverage of the principal and accrued interest Accrued Interest
The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date.
There are two methods for calculating accrued interest:
1) 360-day year method, used for corporate and municipal bonds. .
Outstanding Bonds as of May 31, 2004:
-- $30,000,000 Red River Education Finance Corporation higher education variable rate demand revenue bonds (Texas Christian University Project) series 2001 'AA-';
-- $50,000,000 series 2000 'AA-/F1+';
-- $77,601,000 Fort Worth Higher Education revenue bonds, series 1997 'AA-'.