Fitch Ratings assigns an 'A-' rating to the following series of bonds
issued by the Orange County Funding Corporation. The bonds are expected
to sell via negotiation on Dec. 5, 2012. Proceeds of the 2012 A bonds
will be used refinance an outstanding bank note and to renovate the
Dominican Center, while proceeds of the 2012 B bonds will advance refund
outstanding 2003 bonds.
--$22,000,000 tax-exempt revenue bonds (Mount Saint Mary College
Project), series 2012A;
--$19,000,000 tax-exempt revenue bonds (Mount Saint Mary College
Project), series 2012B.
Mount Saint Mary College (the college) will also be issuing
approximately $26,000,000 of variable rate direct purchase bonds, series
2012C to restructure outstanding 2005 variable rate demand bonds. These
bonds will not be rated and will be directly purchased by TD Bank.
Fitch affirms the rating on the college's outstanding series 2003 bonds
issued by the Dormitory Authority of the State of New York.
The Rating Outlook is Stable.
The bonds are an unsecured obligation of the college, payable from all
legally available funds.
KEY RATING DRIVERS
POSITIVE OPERATIONS: The college consistently generates strong positive
operating margins which continue to result in healthy debt service
coverage. However, while still strongly positive, the operating margin
has declined in recent years.
CONCENTRATED REVENUE STREAM: Like many small private institutions, the
college's revenues are derived primarily from student generated fees,
which are further concentrated given that the majority of students are
New York State residents.
SUFFICIENT LIQUIDITY RESOURCES: Growing level of available funds
provides liquidity acceptable for the rating category.
CHALLENGING ENROLLMENT ENVIRONMENT: Enrollment has grown over the past
few years, but saw a decline in fall 2012. There has been a shift in the
historically strong program offerings, namely education, and management
is reviewing all of its offerings in order to meet the changing
VARIABLE RATE EXPOSURE: The debt portfolio continues to have significant
exposure to variable rate obligations; however, the mode is changing
from a variable rate demand obligation to a direct bank purchased
obligation, thereby lessening the risk renewal associated with standby
The cllege consistently produces a positive operating margin. From
fiscal 2003 through fiscal 2011, the operating margin averaged 16.3%.
Due to an increased level of student aid, in combination with weakened
investment performance in recent years, the margin has declined.
However, 2012 resulted in a still healthy 6.1%. Fitch views this healthy
operating performance positively.
Like many small private institutions, the college is dependent on
student generated revenues. Fitch views positively the fact that net
tuition and fee revenues have continued to increase annually. These
increases have been due to enrollment growth and increased tuition. The
college's tuition level remains competitive within its peer group of
regional private institutions.
Available funds, defined as cash and investments not permanently
restricted, reached $55 million in 2012, comparable to the fiscal 2011
balance. This level of funds equals approximately 102% of operating
expenses and 76% of pro forma debt, down from 113% prior to debt
Increased Yet Manageable Debt Burden
The college's debt burden remains fairly high, 7.0%, and is expected to
increase to 7.5% post issuance. However, concern is mitigated given that
there are no additional debt plans anticipated over the next three to
five years. In addition, given the strength of annual financial
performance, Fitch does not expect this additional debt will affect the
college's ability to cover debt carrying charges from operations.
Founded in 1959 by the Sisters of Saint Dominic of Newburgh, Mount Saint
Mary College is a private independent liberal arts college, located in
Newburgh, New York. The college is relatively small, with a total
headcount enrollment of 2,547 in fall 2012. Approximately 81% of
students are New York State residents, and over 50% of undergraduate
students live on campus. The college offers 47 undergraduate programs,
in addition to three master's programs in education, business and
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:
--'U.S. College and University Rating Criteria' (May 25, 2012);
--'Revenue-Supported Rating Criteria' (June 12, 2012);
--'Fitch Affirms Mount Saint Mary College's Outstanding Rev Bonds 'A-';
Outlook Stable' (Sept. 27, 2011).
U.S. College and University Rating Criteria
Revenue-Supported Rating Criteria
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DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
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