Printer Friendly

Fitch Rates Ohio State University $122MM VRDBs 'AA/F1+'.

Business Editors

NEW YORK--(BUSINESS WIRE)--Aug. 28, 2003

Fitch Ratings assigns a 'AA/F1+' the approximately $122 million Ohio State University (A State University of Ohio) variable-rate demand general receipts bonds, series 2003C bonds. Fitch also assigns an 'F1+' rating and affirms the 'AA' rating for $212.7 million of the Ohio State University's (OSU) variable-rate bonds listed below. On August 21, 2003 Fitch assigned a long term rating to the bonds listed below but delayed assigning a short term rating until a review of liquidity was conducted.

The bonds are scheduled to sell on Sept. 10 via the underwriters Morgan Stanley and Apex Pryor Securities. The bonds will initially be sold in the unit pricing mode with maturities up to 270 days. The final maturity for the bonds is 2033. Bond proceeds will be used to fund various capital improvements. Morgan Stanley & Co. Incorporated will serve as the remarketing agent.

The short-term 'F1+' rating reflects the university's strong and sufficiently liquid balances. As of June 30, 2003 the university identified $578.6 million in short and intermediate term fixed-income securities available in the event of a failed remarketing. The investments provide sufficient liquidity for the series 2003C bonds and $212.7 million of outstanding variable-rate demand bonds.

The 'AA' rating and stable outlook are primarily based on OSU's position as the flagship institution with stable enrollment, a low debt burden, a diversified source of revenues, and its expanding status as a research institution. OSU's fall 2002 headcount enrollment of 57,271 has experienced slight growth of 3.7% over the past five years with most of the growth occurring at the extended campuses. The debt burden of OSU is low as reflected by pro forma maximum annual debt service (MADS) representing a use of only 2.7% of fiscal 2002 revenues. OSU's funding sources are diversified with hospital revenues representing the largest funding source at 31% of fiscal 2002 total revenues. Three funding sources, state appropriations, contracts, grants and gifts, and tuition, fees and auxiliary revenue each represent approximately 20% of total revenues. Funding through contracts and grants has almost doubled over the past five years with the largest federal contributor being the National Institutes of Health. The growth in federal funding reflects the growing importance of OSU's research efforts and accomplishments.

The primary credit concern is OSU's exposure to the volatile health care sector through its operations of three hospitals. During fiscal years 2000 and 2001, the hospitals experienced operating losses due primarily to increasing insurance premiums and funding of additional reserves for self-insurance plans. The hospitals achieved positive operating margins in fiscal 2002 with much of the improvement attributed to increased patient volume and increased rates for certain services. Fiscal 2003, which ended June 30, is expected to also have positive operating margins. Within the next 16 months, OSU expects to open a heart hospital. A portion of the series 2003 bond proceeds will be used to fund the hospital. While heart hospitals are generally more profitable than general care hospitals, future successes are dependent on limited competition, adequate service rates and sufficient patient volume.

OSU was founded in 1870 as a land grant institution. Its main campus is located in Columbus, OH and enrolled 82.5% of the fall 2002 total enrollment. Other campuses in the state are located in Lima, Mansfield, Marion, Newark and Wooster.

Outstanding variable rate demand bonds:

The Ohio State University (A State University of Ohio) general receipts bonds:

-- $50,840,000 series 1997, 'AA/F1+';

-- $69,300,000 series 1999B1, 'AA/F1+';

-- $15,600,000 series 1999B2, 'AA/F1+';

-- $76,950,000 series 2001, 'AA/F1+'.
COPYRIGHT 2003 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2003, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Business Wire
Date:Aug 28, 2003
Words:606
Previous Article:GlobespanVirata Completes Acquisition of Intersil's Wireless Networking Products Group.
Next Article:Lincoln National to Participate in KBW Insurance Conference; Live Webcast Available.


Related Articles
Fitch Rates Dartmouth College $110.4MM VRDBs 'AAA/F1+'.
Fitch Affirms 'AA-' Rating for Texas Christian University, TX.
CORRECT: Fitch Rates Dartmouth College $110.4MM VRDBs 'AAA/F1+'.
Fitch Affirms 'AA-' Rtg On Texas Christian University, TX.
Fitch Assigns 'AA/F1+' to Vanderbilt University, Tennessee.
Fitch Assigns 'AA-' Rating for Texas Christian University.
Fitch Rates Ohio State University's $118MM V-R Bonds 'AA/F1+'; Stable Outlook.
Fitch Rates Texas Christian University $80MM VRDBs 'AA-/F1+'.
Fitch Rates Texas Christian University's Refunding Bonds 'AA-'.
Fitch Affirms Ohio State Univ $1.10B Gen Recpt Bonds at 'AA'; Outlook Stable.

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters