Fitch Rates the University of Oklahoma's $38MM General Revenue Bonds 'AA'; Outlook Stable.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 -- 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 University of Oklahoma University of Oklahoma, abbreviated OU, is a coeducational public research university located in the U.S. state of Oklahoma. Founded in 1890, it existed in Oklahoma Territory near Indian Territory 17 years before the two became the state of Oklahoma. (OU) General Revenue Bonds, Tax Exempt Series 2007A in the approximate amount of $26,195,000 and Federally Taxable Series 2007B in the approximate amount of $11,860,000 have been assigned an underlying rating of 'AA' by Fitch. Fitch also affirms its 'AA' rating on the outstanding series 2006A parity bonds Parity Bond Two or more bond issues with equal rights to bond payments. Notes: Also referred to as "part passu" or "pari passu" bonds, these types of fixed-income securities are commonly issued by municipalities as a way to gather finance capital. . The bonds are scheduled to sell on or about Jan. 17, 2007 via a negotiated sale led by BOSC, Inc. The Rating Outlook is Stable. Series 2007A bond proceeds will be used primarily to fund the renovation of student housing and various smaller projects. Series 2007B bond proceeds will be used to construct a multi-tenant office facility. The bonds are secured by a pledge of all legally available revenues of OU. OU may not pledge revenues appropriated by the legislature from tax receipts but may pledge revenues from the Oklahoma Education Lottery Act. The 'AA' rating reflects OU's position as the flagship institution in the state, consistent operating performance, significant fundraising not reflected on OU's financial statements and an experienced management team. Fall 2006 headcount enrollment on the Norman campus was 26,020 which reflects a 3.3% decline over the past five years. However, freshmen applications have increased by 5.1% over the same period. Student generated fees, which include tuition, fees and auxiliary enterprise revenues, generated 39.9% of OU's fiscal 2006 revenues. The average annual operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for fiscal years 2002-2006 is 1.9%. The margin for fiscal 2006 was 0.1%. State appropriations for the current fiscal year 2007 are approximately 7% higher than fiscal 2006. The ability to maintain relatively stable financial performance given the slight enrollment declines and state funding reductions that began in fiscal 2003, and only in fiscal 2006 achieved a level that slightly exceeded the fiscal 2002 appropriation, can partially be attributed to management's actions to reduce costs. OU benefits from endowment funds Endowment funds Investment funds established for the support of institutions such as colleges, private schools, museums, hospitals, and foundations. The investment income may be used for the operation of the institution and for capital expenditures. including $71 million on its financial statements. Not included on OU's financial statements are $561 million held by the OU Foundation, $225 million held by the State Regents and $103 million held by the state land commission. When reviewing OU's liquidity for fiscal 2006, Fitch included $133 million of investments held by the OU foundation as available to meet OU's needs. Inclusion of this portion of the OU foundation's investments resulted in liquidity levels similar to other 'AA' public institutions rated by Fitch. The primary credit concerns are the debt burden and the low-growth demographics The attributes of people in a particular geographic area. Used for marketing purposes, population, ethnic origins, religion, spoken language, income and age range are examples of demographic data. for young adults in the state. The projected change in the number of high school graduates between now and 2017 is 1%. Approximately 70% of OU's students come from the state. However, mitigating the weak demographics of Oklahoma According to the U.S. Census Bureau, as of 2006, Oklahoma has an estimated population of 3,579,212, which is an increase of 35,770, or 1.0%, from the prior year and an increase of 128,558, or 3.6%, since the year 2000. is the fact that approximately 23% of OU's students come from Texas where the projected growth rate is 16%. To attract students, OU has focused on improving its housing and athletic facilities and has generally financed these facilities with debt. OU currently has $363 million of bonds outstanding. Maximum annual debt service (MADS) including the projected series 2007A and 2007B is estimated to be $30.2 million. MADS would consume 5.1% of fiscal 2006 revenues. The median for 'AA' Fitch rated public universities is 3.0%. While OU's debt burden is higher than the 'AA' median, Fitch believes the debt is manageable since a significant amount of the debt financed revenue producing facilities. OU has campuses located in Norman, Oklahoma City Oklahoma City (1990 pop. 444,719), state capital, and seat of Oklahoma co., central Okla., on the North Canadian River; inc. 1890. The state's largest city, it is an important livestock market, a wholesale, distribution, industrial, and financial center, and a farm and Tulsa and is a member of Big XII Conference. 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. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion