Fitch Confirms Northwestern University's (Illinois) Short-Term Rating at 'F1+'.

NEW YORK -- Fitch Ratings confirms the short-term 'F1+' rating on approximately $260.8 million of outstanding Illinois Finance Authority adjustable-rate revenue bonds issued on behalf of Northwestern University (Northwestern, or the university) and the 'F1+' rating on the university's $200 million taxable commercial paper (CP) program.

On Feb. 2, 2009, the university intends to remarket $142.9 million of its outstanding adjustable-rate bonds from the current weekly reset mode into 364-day put bonds. At present, the university intends to keep the remaining $117.9 million of adjustable-rate bonds in weekly reset mode. However, this is subject to change as the university continues to assess its liquidity needs and debt profile. The university has a strong, experienced management team, which has written policies and a decision timeline to prepare for the Feb. 1, 2010 tender date.

The 'F1+' rating is supported by Northwestern's internal liquidity, consisting of high-quality, highly liquid investments. For fiscal 2008, the university had $6.4 billion of available funds, defined by Fitch as unrestricted and temporarily restricted cash and investments. Included in available funds is the university's liquid investment pool, which consists mostly of cash, cash equivalents, and U.S. government securities, which are available the same or next day. As of Dec. 30, 2008, the liquid investment pool had a balance of $601.8 million and would cover the university's $260.8 million of outstanding adjustable-rate bonds and the full $200 million of authorized CP by 1.31 times (x). In addition, the university has backup liquidity support in the form of two standby credit agreements provided by the Northern Trust Company in an aggregate amount of $150 million, which are dedicated solely to a failed remarketing. Inclusive of the standby credit agreements, the university's liquidity coverage would improve to 1.63x. To limit potential calls on its liquidity, the university restricts the amount of CP that may come due on any given day to $50 million.

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