Fitch Ratings assigns an 'AA' rating to approximately $29.5 million of revenue financing system (RFS) revenue and refunding bonds, series 2012 issued by the Board of Regents of Texas State University System (TSUS, or the system).
The fixed rate series 2012 bonds are expected to price via negotiated sale on or about January 10th. Proceeds of the series 2012 bonds will be used to fund the construction and equipping of various capital projects across the system's multiple campuses, to refund certain outstanding RFS bonds, and to pay associated costs of issuance.
In addition, Fitch affirms the 'AA' rating on $776.9 million of outstanding parity RFS bonds.
SECURITY
RFS debt is secured by pledged revenues which include all legally available, unencumbered funds and balances of TSUS.
KEY RATING DRIVERS
'AA' RATING AFFIRMED: The 'AA' rating reflects the system's consistently positive operating margin, adequate balance sheet resources and strong demand. Offsetting credit factors include TSUS's moderately high debt burden and its significant capital needs.
CONSERVATIVE FISCAL MANAGEMENT: Timely measures taken by TSUS's management team to adapt to reductions in state appropriations, and to align future capital plans with resources available for repayment, provides further rating stability.
CONSISTENT GROWTH IN ENROLLMENT: Increasing headcount and regular tuition and fee increases across the system's campuses ensure consistent growth of its primary revenue stream (tuition and fees); expenses associated with a large and still growing population are carefully managed.
EXTENSIVE BUT MANAGEABLE CAPITAL PLANS: Identified capital plan projects totaling up to $1.3 billion will be pursued to the extent internal funding sources are sufficient, including state support, and/or system campuses have the capacity to service carrying charges associated with external sources of financing.
Additional information is available at 'www.fitchratings.com'.
The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Revenue-Supported Rating Criteria' (June 20, 2011);
--'U.S. College and University Rating Criteria' (July 14, 2011)
Applicable Criteria and Related Research:
Revenue-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=637130
U.S. College and University Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=640830
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