Fitch Rates Texas A&M $20MM PUF Note Installment 'AAA/F1+'.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. affirms the 'AAA/F1+' rating of the Board of Regents An independent governing body that oversees a state's public Colleges and Universities. All 50 states have governing bodies that oversee the administration of public education. of The Texas A&M University System (the A&M System) Permanent University Fund (PUF PUF Public Use File PUF Parallel URL fetcher (*nix download tool) PUF Physically Unclonable Function PUF Northern Puffer PUF Paid-Up-Front PUF Preguntas de Uso Frequente (Spanish: Frequently Asked Questions) ) flexible rate notes (FRNs) program, as the A&M System plans to issue a new $20 million installment of the FRNs on or about Oct. 5. The Rating Outlook remains Stable for the program, which has a maximum capacity of $80 million. Prior to the issuance of this installment, there were no FRNs outstanding. J.P. Morgan Securities Inc. is remarketing agent. In addition, the rating of the A&M System's approximately $302 million of outstanding PUF bonds and the Stable Outlook is affirmed at 'AAA'. The long-term rating of 'AAA' on the A&M System's PUF bonds and subordinated FRNs results from the PUF's vast investment holdings, $8.9 billion on May 31, 2005, and constitutional limits on the amount of debt issuance. The PUF is a public endowment benefiting institutions of the A&M System and The University of Texas System (the UT System). The A&M System institutions are entitled to 33.3% of annual PUF distributions to the available university fund (AUF n. 1. A changeling or elf child, - that is, one left by fairies; a deformed or foolish child; a simpleton; an oaf. ). By constitutional mandate, the UT System board of regents establishes annual distribution rates from the PUF to the AUF that provide stable, inflation-adjusted payments to beneficiary institutions while preserving purchasing power Purchasing Power 1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase. 2. over the long term. The constitution requires the AUF distribution to cover PUF debt service annually, effectively committing all PUF resources to bond and note payment and minimizing credit risk. For fiscal 2004, the AUF distribution was $355.6 million and the A&M System's share was $118.5 million. For fiscals 2005 and 2006, the amounts approved for distribution are $341.2 million and $357.3 million, respectively. In February 2003, the A&M System refunded certain outstanding PUF bonds in order to provide budget relief. As a result, debt service declined to $16.1 million in fiscal 2004 from $41.2 million the previous year. Debt service is scheduled to increase to $32 million in fiscal 2005, $34 million in fiscal 2006, and slightly over $50 million thereafter. As a result, the increase in debt service coverage to 6.9 times (x) in fiscal 2004 is not expected to continue. By fiscal 2007, debt service coverage should return to more of its historical coverage of 2x-3x. The short-term rating of 'F1+' on the FRNs is based on the ability of A&M System resources (1) In a computer system, system resources are the components that provide its inherent capabilities and contribute to its overall performance. System memory, cache memory, hard disk space, IRQs and DMA channels are examples. , including its share of the PUF, to cover maximum liquidity demands on short-term obligations. These include the $80 million of FRNs and the revenue financing system commercial paper program, which has a maximum program size of $200 million. The note liquidity agreement requires that no more than $10 million mature on any day. Upon notification of a failed remarketing, the A&M System would notify UTIMCO UTIMCO University of Texas Investment Management Company (University of Texas Investment Management Company), which agrees to purchase the FRNs as investments for the PUF on the same day or by the following business day. If the purchase date is the next business day, the A&M System would use non-PUF resources to acquire unremarketed FRNs until the next business day when UTIMCO would purchase them if they are not placed during the intervening hours. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. 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