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By clicking “I AGREE”, you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s information that becomes accessible to you (the “Information”). References herein to “Moody’s” include Moody’s Corporation. and each of its subsidiaries and affiliates..

 

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Announcement:

MOODY'S AFFIRMS UNIVERSITY OF MIAMI'S (FL) A3 DEBT RATING; OUTLOOK IS STABLE

07 Dec 2011

UNIVERSITY HAS $751.8 MILLION OF RATED DEBT

New York, December 07, 2011 -- Moody's has affirmed University of Miami's (UM) A3 debt rating and stable outlook. The University has approximately $751.8 million of rated debt as detailed at the end of this report. The outlook is stable.

SUMMARY RATING RATIONALE:

The A3 rating reflects the University's healthy student market as a comprehensive private research university located in South Florida with strong fundraising and a largely fixed rate debt structure. These credit strengths are offset by challenges including significant healthcare exposure (3 owned hospitals, outpatient centers, and a large faculty practice plan), thin liquidity relative to expense base, and a large unfunded pension liability.

STRENGTHS

*UM maintains a healthy student market position and research profile as an urban comprehensive university, with 15,357 full-time equivalent students enrolled in fall 2011 (approximately two-thirds undergraduate) and nearly $230 million of research expenses in FY 2011 (per audit). Net tuition per student is high at $26,763 in FY 2011, partly attributable to the sizeable graduate and professional student population.

*The majority of University of Miami's debt is fixed-rate (all debt except for operating line of credit which had $15.9 million outstanding in FY 2011).

*UM continues to demonstrate very strong fundraising success, with $104.5 million of average annual gift revenue in FY's 2009-2011.

*Slowed capital and borrowing plans in recent years in response to the challenged economy. The University's last issuance of long-term debt was in 2008 (to purchase a hospital). The $824.3 million of debt in FY 2011 represents a 5% decrease over FY 2009 direct debt, and the University's operating leverage is low with 35% debt-to-revenue in FY 2011.

CHALLENGES

*UM has significant health care exposure, with ownership of three hospitals including University of Miami Hospital which was purchased in December 2007 as well as a large faculty practice plan (over 900 physicians). The University's exposure to Jackson Memorial Hospital, a financially-struggling Miami-Dade County owned hospital, is a serious credit concern which we will continue to monitor closely. In FY 2011, consolidated patient care-related revenues represent approximately half of all of the University's operating revenue.

*UM's financial resources provide thin coverage of a very large expense base ($2.3 billion of expenses in FY 2011). In FY 2011, the ratio of expendable financial resources to operations is modest at 0.17 times, and unrestricted monthly liquidity of $607 million would provide 101 days cash on hand.

*Although the University's defined benefit pension plan was closed to new participants in 2007, the unfunded obligation remains large, partly due to past investment losses and a lower discount rate. A small number of higher education institutions have defined benefit pension plans, with most pension plans structured as defined contribution plans.

*The University's consolidated operating performance has tightened over the past five years and exposure to healthcare-related operations has increased with the hospital acquisition. In FY 2011, the University generated a 1.1% operating margin and 8.2% operating cash flow margin (compared to a 4.1% operating margin and 10.3% cash flow margin in FY 2007 by Moody's calculation).

Outlook

The stable outlook is based on our expectation that UM maintain a healthy student market and strong fundraising. We expect operating performance to continue to strengthen, in particular reflecting management's focus on longer-term targets for health care operations improvement.

WOULD MAKE THE RATING GO UP

Significant growth of unrestricted liquidity coupled with improved operating cash flow and maintenance of strong student market and research positions

WHAT COULD MAKE THE RATING GO DOWN

Significant additional borrowing absent growth of financial resources and cash flow to cover new debt service; material reduction in liquidity or cash flow levels; material weakening of UM's healthcare operations

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

Although this credit rating has been issued in a non-EU country which has not been recognized as endorsable at this date, this credit rating is deemed "EU qualified by extension" and may still be used by financial institutions for regulatory purposes until 31 January 2012. ESMA may extend the use of credit ratings for regulatory purposes in the European Community for three additional months, until 30 April 2012, if ESMA decides that exceptional circumstances arise that may imply potential market disruption or financial instability. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant 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 relevant 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 relevant 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.

Information sources used to prepare the rating are the following: parties involved in the ratings, and public information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

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.

Kimberly S. Tuby
Vice President - Senior Analyst
Public Finance Group
Moody's FIS Domestic Sales Office - Boston MA
1 Post Office Square, 39th Floor
Boston, MA 02109-2103
U.S.A.

Beth I. Wexler
VP - Senior Credit Officer
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 AFFIRMS UNIVERSITY OF MIAMI'S (FL) A3 DEBT RATING; OUTLOOK IS STABLE
No Related Data.
© 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY100,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

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