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Rating Action:

Moody's places long-term ratings of all Illinois public universities under review for possible downgrade

Global Credit Research - 18 Dec 2012

Rating revisions follow the revision of the State of Illinois' outlook to negative from stable; $2.6 billion of debt affected

New York, December 18, 2012 --

Moody's Investors Service has placed the long-term ratings of all Illinois public universities on review for possible downgrade -- specifically Eastern Illinois University, Governors State University, Illinois State University, Northeastern Illinois University, Northern Illinois University, Southern Illinois University, University of Illinois and Western Illinois University. Placement of the ratings under review for possible downgrade follows the December 13, 2012 revision of the outlook for the state's general obligation and related credit ratings to negative from stable. Moody's currently rates a total of $2.6 billion of rated university debt.

SUMMARY RATING RATIONALE

Placement of the Illinois public universities ratings under review for possible downgrade reflects the universities' significant dependence on the state for operating funds and fringe benefits, as well as extensive appropriation payment delays in a challenging budget environment that continues to pressure Illinois' public universities cash flow and liquidity. For more information on the State of Illinois, please see Moody's report dated December 13, 2012.

Our review will focus on an assessment of fiscal 2012 financial results, fall 2012 and spring 2013 enrollment, and fiscal 2013 projected operating results, cash flows and reserves. Additionally, we will evaluate pledged revenue coverage of debt service payments, reserve levels, capital projects and debt plans, and the payment timing of the state's fiscal 2013 appropriations. We will also assess the impact of any pension legislation on the universities. We expect to conclude this review within the next 90 days.

RATED DEBT

*Eastern Illinois University:

Auxiliary Facilities System Revenue Bonds: A2 under Review for Possible Downgrade

Certificates of Participation: A2 under Review for Possible Downgrade

*Governors State University:

University Facilities System Revenue Bonds: A2 under Review for Possible Downgrade

Certificates of Participation: A2 under Review for Possible Downgrade

*Illinois State University:

Auxiliary Facilities System Revenue Bonds: A2 under Review for Possible Downgrade

Certificates of Participation: A2 under Review for Possible Downgrade

*Northeastern Illinois University:

University Facilities System Revenue Bonds: A2 under Review for Possible Downgrade

Certificates of Participation: A2 under Review for Possible Downgrade

*Northern Illinois University:

Auxiliary Facilities System Revenue Bonds: A2 under Review for Possible Downgrade

Certificates of Participation: A2 under Review for Possible Downgrade

Lease Revenue Bonds, Series 1999: A2 under Review for Possible Downgrade

*Southern Illinois University:

Housing and Auxiliary Facilities System Revenue Bonds: A2 under Review for Possible Downgrade

Medical Facilities System Revenue Bonds: A2 under Review for Possible Downgrade

Certificates of Participation: A2 under Review for Possible Downgrade

*University of Illinois:

Auxiliary Facilities System Revenue Bonds: Aa2 under Review for Possible Downgrade

Certificates of Participation: Aa2 under Review for Possible Downgrade

South Campus Development Project Revenue Bonds: Aa3 under Review for Possible Downgrade

Health Services Facility System Revenue Bonds: A1 under Review for Possible Downgrade

*Western Illinois University:

Auxiliary Facilities System Revenue Bonds: A2 under Review for Possible Downgrade

Certificates of Participation: A2 under Review for Possible Downgrade

PRINCIPAL RATING METHODOLOGY

The principal methodology used in this rating was U.S. Not-for-Profit Private and Public Higher Education published in August 2011. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Please see the credit ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Erin Veronica Ortiz
Analyst
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Emily Schwarz
Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's places long-term ratings of all Illinois public universities under review for possible downgrade
No Related Data.

 

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