Fitch Ratings has affirmed the 'F1+' rating on Texas A&M University
System's $300 million tax-exempt Revenue Financing System (RFS)
commercial paper (CP) program.
RFS debt is secured by a lien on and pledge of all legally available
revenues and fund balances of the Texas A&M University System (TAMUS, or
KEY RATING DRIVERS
SUFFICIENT LIQUID RESOURCES: The 'F1+' rating is based on TAMUS's
ability to cover the maximum potential liquidity demands presented by
its tax-exempt, RFS CP program by at least 1.25x from internal resources.
STRONG FINANCIAL PERFORMANCE: TAMUS has consistently demonstrated strong
financial characteristics, including a relatively diverse revenue base,
historically positive operating results, a manageable debt burden and
adequate balance sheet flexibility. Fitch rates TAMUS's long-term RFS
pledge 'AA+' with a Stable Outlook.
The 'F1+' rating is based on the availability of adequate highly liquid,
highly rated securities to cover the liquidity demands presented by
TAMUS's RFS CP program. The CP program has a maximum authorization of
$300 million. As of Dec. 31, 2012, the system's liquid assets totaled
$972.1 million, providing 3.24 coverage of the maximum authorized
amount. Fitch views this level as healthy, and consistent with the
expectation for the highest short-term rating. Per criteria, a minimum
of 1.25x coverage is expected to achieve the 'F1+' level.
The system does not maintain any exposure to variable rate debt
instruments aside from its CP programs. At present, $192 million is
outstanding in the RFS CP program, versus the maximum authorization of
$300 million. Compared to the actual amount outstading, liquid assets
provide a stronger 5.06x coverage.
The strength of the system's operations further support the short-term
rating. Rated 'AA+' with a Stable Outlook by Fitch, the system's annual
financial results have averaged 3.8% over the past five fiscal years
(2008 - 2012), including a strong 5.3% in fiscal 2012. TAMUS's operating
budget is supported by diverse revenues - in fiscal 2012,
student-generated revenues provided the greatest percentage of revenues
at 27.2%, followed by state appropriations at 26.7% and grant and
contract revenue at 24.8%. Consistency in these key revenue streams and
the related operating performance support the ongoing affordability of
the TAMUS's debt burden and growth in overall financial resources which
Fitch views favorably.
TAMUS consists of 11 academic institutions, seven research and service
agencies, and a health sciences center. Since fall 2007, total headcount
increased at an average annual rate of 3.7% to 122,435 in fall 2011. The
flagship campus is located in College Station, Texas.
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:
--'Criteria for Assigning Short-Term Ratings Based on Internal
Liquidity', dated June 15, 2012;
--'Fitch Affirms Texas A&M Univ System Revs at 'AA+'; Outlook Stable',
dated Feb 2, 2012.
Criteria for Assigning Short-Term Ratings Based on Internal Liquidity
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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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