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MOODY'S ASSIGNS Aa2/VMIG1 RATING TO UNIVERSITY OF MASSACHUSETTS BUILDING AUTHORITY'S $135 MILLION OF SERIES 2011-1 REFUNDING REVENUE BONDS AND AFFIRMS OUTSTANDING RATINGS; OUTLOOK IS STABLE

26 May 2011

UNIVERSITY OF MASSACHUSETTS WILL HAVE $1.2 BILLION OF DEBT WITH AN UNDERLYING RATING INCLUDING THE CURRENT OFFERING AND $2.4 BILLION OF TOTAL DEBT

University of Massachusetts
Higher Education
MA

Moody's Rating

ISSUE

RATING

Series 2011-1 Refunding Revenue Bonds

Aa2/VMIG 1

  Sale Amount

$135,040,000

  Expected Sale Date

06/08/11

  Rating Description

Public Higher Education Revenue Bonds

 

 
Moody's Outlook   Stable
 

Opinion

NEW YORK, May 26, 2011 -- Moody's Investors Service has assigned an Aa2/VMIG1 rating to the University of Massachusetts Building Authority's $135 million of tax-exempt Series 2011-1 Refunding Revenue Bonds. The bonds will be variable-rate demand bonds with the tender feature supported by a standby bond purchase agreement provided by Wells Fargo Bank. The bonds will be issued by the Authority on behalf of and payable from the University of Massachusetts (see Legal Security section below). The Authority is consolidated within the University's audited financial statements. The University's outlook remains stable. Moody's has also affirmed its Aa2 rating on the Authority's outstanding rated debt.

We expect that the Series 2008-4 variable-rate demand bonds will also be refunded near term with Series 2011-2 Refunding Revenue Bonds expected to initially to be issued in a Windows Rate mode. These bonds will be benefit from a guaranty from the Commonwealth. They will not have a bank liquidity facility supporting their tender feature. We expect to assign a rating to those bonds in a separately issued report shortly.

SUMMARY RATING RATIONALE: The Aa2 long-term rating reflects the University of Massachusetts' important role as a public university system with five campuses in the Commonwealth of Massachusetts, serving diverse student populations and conducting growing levels of research activity. Credit challenges include a significant increase in debt in recent years, pressure on state funding, and relatively modest levels of philanthropic support for a system of this size. The VMIG1 short-term rating on the Series 2011-1 bonds reflects our review of the Wells Fargo standby bond purchase agreement.

STRENGTHS

*Large and growing enrollment of 58,563 full-time equivalent (FTE) students in fall 2010 with a statewide presence through the system's five campuses as well as UMass Online

*Positive operating performance (3.2% three-year average surplus in FY 2008-2010) and ongoing focus on expense containment

*Revenue diversification and continued growth of research activity (close to $400 million of research expenses in FY 2010)

CHALLENGES

*Rapid growth in debt levels resulting in increased balance sheet and operating leverage (debt to revenue of 0.9 times and expendable financial resources to debt of 0.36 times)

*Vulnerability to reduced state appropriations (Commonwealth Aa1 G.O. rating) and need to continue to focus on expense containment and revenue growth

*Relatively low philanthropic support for a system of this size

DETAILED CREDIT DISCUSSION

USE OF PROCEEDS: Bond proceeds will be used to refund the Authority's outstanding Series 2008-3 variable rate demand bonds and pay the cost of issuance.

LEGAL SECURITY: Under a Contract for Management and Services between the University and the University of Massachusetts Building Authority, the University is required to remit to the Authority annually an amount sufficient to pay debt service and other costs associate d with operating and maintaining the financed projects during the next year. The annual certified amount shall be payable from a variety of revenue streams, including all legally available revenues and funds (including unrestricted net assets--$600.5 million in FY 2010). The amounts remitted are derived from University available revenues, including state appropriations and auxiliary revenues associated with the financed projects but excluding other amounts such as revenues from sales and services and grants and contracts.

DEBT STRUCTURE AND DEBT-RELATED DERIVATIVES:

Including this borrowing, the University will have $2.4 billion of debt outstanding that has been issued in three forms: Massachusetts Health and Educational Facilities Authority (formerly MHEFA, now MassDevelopment) issuance on behalf of the University; MHEFA issuance on behalf of the Worcester City Campus Corporation; and University of Massachusetts Building Authority issuance on behalf of the University.

Of the pro-forma debt outstanding, approximately 21% is in a variable rate mode, including $20 million of Series 2000A long-mode put bonds which have a mandatory tender scheduled for April 1, 2013 which is backed by the University's own liquidity. Variable rate demand obligations total $494 million and are secured by letters of credit (LOCs) or standby bond purchase agreements (SBPAs). The Series 2008-1 is supported by a Lloyds Bank letter of credit (expires April 2013). The Series 2008-A is supported by Bank of America standby bond purchase agreement (expires April 2013). The Series 2008-3 (which is expected to be refunded with these Series 2011-1 bonds) is currently supported by a Bank of America letter of credit (expires September 2011). The Series 2008-4 is supported by a Bank of America standby bond purchase agreement (expires September 2011; bonds expected to be refunded in coming weeks). Under these agreements, bank bonds would be subject to repayment over a compressed time frame and an event of default could result in acceleration of the outstanding debt.

We expect that the Series 2008-4 variable-rate demand bonds will also be refunded near term with Series 2011-2 Refunding Revenue Bonds expected to initially to be issued in a Windows Rate mode. These bonds will be benefit from a guaranty from the Commonwealth. They will not have a bank liquidity facility supporting their tender feature. We expect to assign a rating to those bonds in a separately issued report shortly. Per the Series Resolution for the Series 2011-2 bonds, bondholders will be able to optionally tender the bonds daily, which will trigger remarketing window up to 30 days. Payment of purchase price for these optional tenders is only payable from remarketing proceeds. If sufficient remarketing proceeds are not available for purchase of the tendered bonds, then all Series 2011-2 bonds in the Windows mode shall be subject to mandatory tender at the end of the Mandatory Tender Window (the Mandatory Tender Date which shall be 210 days after the initial optional tender date or a shorter term as specified by the remarketing agent and approved by the Authority). Failure of the Building Authority to pay the purchase price of all tendered bond on this final Mandatory Tender Date will constitute an Event of Default under the Series Resolution. Moody's expects to assign long and short term ratings to these bonds within the next two weeks, with the rating reflecting the Commonwealth's guaranty. The short-term rating will reflect Moody's approach to rating a longer mandatory tender based on market access as the primary source of repayment. However, we also believe that the University has adequate liquidity available to support payment on the Mandatory Tender Date. Management reports $316.6 million of money market fund balances as of April 30, 2011, compared to $101.7 million of anticipated Series 2011-2 Windows mode bonds. All of the University's other variable-rate debt has its tender feature supported by a bank liquidity facility, except for the $20 million of Series 2000 long mode put bonds which have a mandatory tender scheduled for April 1, 2013. Over the past year, the lowest point for these money market fund balances has been $170 million in July 2010.

The University of Massachusetts Building Authority is party to three variable to fixed rate interest rate swap agreements with a current total notional amount of $490 million that are designed to hedge the interest rates of a portion of its variable rate debt. Under the agreements, the Authority pays a fixed rate and receives a variable rate from the counterparty that is based on a percentage of either one-month or three-month LIBOR. One swap for $237 million is with Citibank, N.A. (rated A1/P-1), a second swap for $227 million is with UBS AG (rated Aa3/P-1), and the third swap is for $26 million with Deutsche Bank AG (rated Aa3/P-1). Under the swaps, the Authority is not currently required to post collateral. The swap with Citibank is insured by Ambac. Under the Citibank swap documents the Authority has a collateral posting requirement upon an Insurer Downgrade Event if the Authority's credit rating falls to A2 or below (or the equivalent by Standard and Poor's) and the mark to market value on the swap exceeds negative $10 million to the Authority. The counterparties can terminate the swaps if the Authority's long-term unsecured senior debt rating is withdrawn, suspended, or falls below Baa2 (or the equivalent from another credit rating agency). The combined market valuations of the swaps was negative $55.6 million to the University of Massachusetts Building Authority as of April 29, 2011. Moody's has incorporated the risks associated with the swaps into the current rating.

MARKET/COMPETITIVE STRATEGY: LARGE ENROLLMENT BASE ACROSS MULTIPLE CAMPUSES AND GROWING RESEARCH ACTIVITY

The University of Massachusetts is the flagship public university for the Commonwealth. It comprises five campuses serving distinct populations located throughout the state as well as UMass Online, which offers individual courses and full degrees in certain fields. The University's broad position within Massachusetts, status as a flagship system, and importance in the public higher education system of the Commonwealth provide a strong underpinning to its market position.

In fall 2010, the system enrolled 58,563 total full-time equivalents (FTE), up nearly 15% over fall 2007 FTE. Application volume across all campuses is strong for fall 2011 with management projecting some moderation in future enrollment growth, roughly 2-3% per year. Undergraduate students comprise approximately 80% of total enrollment, with graduate and professional students making up the remainder including those at the medical school on the Worcester campus and at a newly added law school at Dartmouth which opened in fall 2010 with approximately 318 law students.

Student demand remains healthy, with a sustained trend of increasing freshmen application volume allowing the University to become increasingly competitive. However, moderate pressure on the matriculation ratio (percent of accepted students who enroll) highlights a competitive student market, including a multitude of higher education institutions in the northeast and strong public university systems in the northeast states. In fall 2010, across all campuses the system admitted 68% of freshmen applications (selectivity ratio), and of those admitted 24% chose to enroll (matriculation ratio). The 24% matriculation ratio represents a steady decline in recent years, down from 31% in fall 2006. Dependence on Massachusetts students, particularly at the undergraduate level where they account for approximately 85% of first-year enrollment, is a vulnerability given the anticipated moderate decline in high school graduates in the state over the next decade.

Research is an increasing focus for the University, and it has achieved success in expanding its research enterprise in recent years. Per the audited financial statements, the University had over $404 million of research expenses in FY 2010, representing 15.6% of total expenses. The University has received ARRA funded grants and contracts totaling close to $124 million. The bulk of research expenditures are in the life sciences (55%), which activity is concentrated at the Amherst and Worcester campuses. The $400 million Albert Sherman Center at the Worcester campus, which is currently under construction, will double research capacity on that campus. The Commonwealth is expected to contribute approximately $90 million toward the construction of the research center.

OPERATING PERFORMANCE: POSITIVE OPERATING PERFORMANCE, WITH ONGOING EXPENSE CONTAINMENT AND REVENUE DIVERSIFICATION TO OFFSET CUTS IN STATE FUNDING

The University has produced healthy operating performance in recent years, resulting in a three-year average operating margin of 3.2% through FY 2010. In FY 2010, an operating cash flow margin of 11% generated debt service coverage of 2.2 times. With the significant increase in debt in the past two years, we expect debt service coverage to tighten although remain adequate. Further, certain debt-financed projects (such as the student housing at Amherst) should generate additional revenue in the future. The University remains committed to ongoing expense reductions including the Trustees efficiency task forces. Based on management-provided unaudited FY 2011 interim financial data, we expect the University to generate another positive operating margin in FY 2011.

Revenue diversity is a positive credit factor for the University. In FY 2010, student charges (primarily fees and auxiliary revenues, as the University remits most tuition to the Commonwealth) represented 30% of operating revenues, while government appropriations, including federal stimulus funding (ARRA), accounted for 21%, grants and contracts revenue comprised 19%, and investment income was just 2%. Another 25% of revenues were from revenues associated with sales and services activity, chiefly services provided by Commonwealth Medicine, a public, non-profit consulting organization, and Massachusetts Biologic Laboratories, a public, non-profit FDA-licensed manufacturer of vaccines and other products. The University is affiliated with UMass Memorial Medical Center, at which its medical students are trained although the Medical Center is a legally separate entity. Moody's rates the debt of UMass Memorial Health System Baa1 with a stable outlook. For more information on the hospital's credit profile, please refer to our last report published on May 5, 2010.

State appropriations to the University have been under pressure as a result of the impact of the economic downturn. Annual state operating appropriations declined a steep 21% in FY 2010 (per the financial statements). Moody's currently rates the Commonwealth of Massachusetts' General Obligation Bonds Aa1 with a stable outlook (for last report on the Commonwealth, please read our report dated May 20, 2011). However, the impact of these cuts was largely mitigated through the receipt of a significant amount of federal ARRA funding, with the University receiving nearly $151 million of ARRA funding in FY 2010 and $37.8 million in FY 2011. On a comparable basis, gross operating appropriations from the Commonwealth were up 15% in FY 2011 over 2010 and management does not expect any state funding rescissions in FY 2011. For FY 2012, the University currently anticipates relatively flat base appropriation from the Commonwealth. This level funding includes the ability in FY 2012 for the University to retain out-of-state tuition at the Boston, Dartmouth, Lowell, and Worcester campuses (estimated to be approximately $11.6 million) per a bill that was recently passed by the Legislature. The University already retains out-of-state tuition from students at the Amherst campus.

Student charges represent approximately 30% of operating revenue (Moody's adjusted) and continued growth of net tuition and auxiliary revenue streams will be a very important credit factor in light of longer-term pressure on operating and capital support from the Commonwealth. Although fall 2011 tuition and fee increases have not been finalized, management anticipates fee increases in the range of 5-8%.

Going forward, the University is also looking to the sales and services activity, particularly from Commonwealth Medicine, to help bolster operating performance. A division of the Medical School, this entity assists state agencies and other organizations to maximize health care reimbursement and improve access and delivery of health care to at-risk and uninsured populations. Total revenue from sales and service activity in FY 2010 was sizeable at $661.7 million. While we acknowledge the increased revenue generated from this activity to date, Moody's notes the potential volatility in this revenue source, especially relative to historically highly stable student charges and research funding.

BALANCE SHEET POSITION: SIGNIFICANT INCREASE IN DEBT RESULTING IN HIGH BALANCE SHEET AND OPERATING LEVERAGE; SLOWED PACE OF BORROWING ANTICIPATED

The University is in the midst of a period of significant capital investment to support recent enrollment growth trends as well as projections for further strong growth across all campuses. Direct debt of $2.4 billion represents a 235% increase over FY 2006 debt. Although the University's balance sheet resources have grown during this timeframe, the pace of increase in debt has far exceeded total financial resources, which grew 43% between FY 2006 and 2010. Further, the University's operating leverage has increased, with pro-forma debt representing nearly 90% of operating revenue in FY 2010. Any post-retirement health care liabilities are recognized on the Commonwealth's financial statements and an other post employment benefit liability (OPEB) does not appear on the University's balance sheet.

Given its level of financial resources and debt, the University's balance sheet is leveraged compared to its peers, with the University choosing to accelerate its borrowing plans at the end of calendar year 2010 in order to take advantage of low interest rates, the Build America Bond program, and competitive construction costs. We expect the pace of future borrowing to slow significantly. As of June 30, 2010, total financial resources grew to $1.1 billion including financial resources of the University of Massachusetts Foundation. Expendable financial resources of $871.3 million in FY 2010 cushion pro-forma direct debt by 0.36 times and operations by 0.34 times.

The University's debt structure creates some additional risks to its financial position. Of the total $2.4 billion of outstanding direct debt, $494 million are variable rate demand bonds compared to $725 million of unrestricted monthly liquidity in FY 2010 (unrestricted cash and investments which could be liquidated within one month). The existing support agreements carry no financial covenants and ratings levels that would trigger an event of default are in the Baa-equivalent range. Nevertheless, the University would be required to pay bank bonds within a compressed time period (generally five years from the bank's purchase, rather than the scheduled maturity of the bonds) and certain events of default would allow for immediate termination and mandatory tender and/or acceleration of the bonds.

The University's fundraising track record and size of endowment are relatively low relative to its size, with the foundations recognizing $10.5 million and $15.9 million of gift revenue in FY 2010 and 2009, respectively. Although fundraising campaigns are typically focused at particular campuses, a more robust fundraising initiative under the leadership of a new president who will be officially starting in July 2011, would be a credit positive.

After incurring investment losses in FY 2009, the endowment of the endowment experienced a 12.35% positive investment return in FY 2010 and an estimated 15% positive return during the first nine months of FY 2011 (through March 31, 2011). As of March 31, 2011, the endowment had a market value of nearly $522 million and asset allocation of approximately: 36% in equities, 31% in cash and fixed income (including high yield), 24% in hedge funds, 6% in real assets and commodities, and 1% in private equity.

SHORT-TERM RATING RATIONALE:

The short-term rating for the Senior Series 2011-1 are derived from the credit quality of the bank, Wells Fargo Bank, National Association (the "Bank") providing a liquidity facility in the form of a standby bond purchase agreement ("SBPA"), the structure of the SBPA and the likelihood of termination of such liquidity facility without a mandatory tender of the Series 2011-1 bonds. Events which would cause the SBPA to terminate without a mandatory purchase of the Series 2011-1 bonds are directly related to the credit quality of the University. Accordingly, the likelihood of any such events occurring is reflected in the long-term rating assigned to the Series 2011-1 bonds. Moody's currently rates Wells Fargo Bank, National Association Aa2/P-1.

The bank may automatically terminate or suspend its payment obligation under the SBPA upon any of the following: (i) an event of insolvency of the Building Authority; (ii) issuance of a final and nonappealable order of a court of competent jurisdiction that the SBPA, the Series 2011-1 bonds, the Resolution, or the Trust Agreement is not binding on the Authority; (iii) any failure by the Building Authority to make timely payment of any principal or interest on the Series 2011-1 bonds, including Series 2011-1 bank bonds, or on any debt on parity with the Series 2011-1 bonds; (iv) the occurrence of a final, non-appealable uninsured judgment against the Building Authority requiring payment by the Building Authority of an amount in excess of $5,000,000 and such judgment is not satisfied within a period of at least 60 days from the date on which such judgment was rendered; (v) the Building Authority shall in writing to the trustee or the Bank: (a) claim that the Resolution or the Trust Agreement, the Bonds, the SBPA, or any material provision in such documents relating to payment of principal and interest on the Series 2011-1 bonds, is not valid and binding on the Building Authority, (b) repudiate its obligations to pay principal and interest under the Resolution, the Trust Agreement, the Bonds or the SBPA, or (c) initiate legal proceedings to seek an adjudication that the Resolution, the Trust Agreement, the Bonds or the SBPA is not valid and binding on the Building Authority; (vi) a finding or ruling by any governmental authority with appropriate jurisdiction to rule on the validity of the SBPA, the Bonds, the Resolution or the Trust Agreement that the SBPA, the Bonds, the Resolution or the Trust Agreement or any material provision in such documents relating to payment of principal and interest is not valid and binding on the Building Authority; (vii) declaration or imposition by any governmental authority with jurisdiction over the Building Authority of a debt moratorium, debt adjustment or comparable restriction on the repayment of the Series 2011-1 bonds or all debt on parity with the Series 2011-1 bonds; or (viii) withdrawal or suspension for credit related reasons or downgrade below investment grade of the rating assigned to the Series 2011-1 bonds or debt on parity with the Series 2011-1 bonds by all rating agencies then rating the Series 2011-1 bonds.

The SBPA includes a provision which permits the incorporation into the SBPA by reference of additional covenants or different rights, remedies, or events of defaults in other bank agreements that the borrower has entered into. However, the SBPA does not permit any additional or different automatic termination events, suspension events or conditions precedent to funding to be automatically incorporated into the SBPA for this transaction unless an amendment to the SBPA is executed and written evidence is received that such amendment will not result in a reduction or withdrawal of the rating on the bonds.

The Series 2011-1 bonds will initially bear interest in the weekly rate mode and will pay interest on each May 1 and November 1, commencing November 1, 2011. The interest rate on the Series 2011-1 bonds are convertible, in whole or part, to the daily mode, term mode or fixed mode. Upon conversion, such bonds will be subject to mandatory tender. The SBPA only covers Series 2011-1 bonds in the weekly and daily rate modes and the short term rating will expire upon conversion of the interest rate for all bonds to a rate mode other than the daily or weekly rate. The Series 2011-1 Bonds in the daily rate mode will also pay interest on each May 1 and November 1.

The SBPA is sized for the full principal amount of the Series 2011-1 Bonds plus 185 days of interest at the rate of 12% per annum (the maximum rate on the Bonds). The SBPA may be substituted. The indenture requires a mandatory tender on a business day at least five business days prior to the date of any such substitution.

The Series 2011-1 Bonds are subject to mandatory tender as follows: (i) on the each interest rate conversion date; (ii) on the business day following the last day of each term rate period; (iii) on a business day at least five business days prior to the expiration date or termination date of the SBPA; (iv) on a business day at least five business days prior to the substitution date of the SBPA; and (v) on a business day at least five business days prior to the termination date of the SBPA following the trustee's receipt of a notice of termination from the Bank due to certain events of default under such liquidity facility.

Bondholders may tender their Bonds during a weekly rate mode on any business day with at least seven days prior written notice to the trustee. During the daily mode, bonds may be tendered for purchase on any business day provided notice is received by the trustee by 10:00 a.m. (Eastern time) on such purchase date. Bonds which are purchased by the liquidity facility due to a failed remarketing may not be released by the trustee until such liquidity facility has been reinstated.

Purchase price payments for Series 2011-1 bonds tendered will be paid from remarketing proceeds and to the extent that remarketing proceeds are not available from a draw under the SBPA. Under the terms of the SBPA, conforming draws received by the bank by 11:00 a.m. (Eastern time) on any purchase date will be honored by 2:00 p.m. (Eastern time) on the same day. The commitment will be reinstated following the remarketing of any Bonds purchased by the Bank, in the amount of such Bonds.

The SBPA will expire upon the earliest of: (i) the stated expiration date, June 9, 2014; (ii) the business day on which no Series 2011-1 bonds remain outstanding; (iii) the close of business on the business day immediately succeeding the date of substitution of the liquidity facility; (iv) the close of business on the 30th day following receipt by the trustee of notice of termination from the bank due to an event of default under the SBPA; (v) the business day following the date all of the Series 2011-1 bonds no longer bear interest in a daily or weekly rate; (vi) the date the available commitment has been reduced to zero; and (vii) the date of immediate termination of the applicable SBPA due to certain events of default under the SBPA.

Outlook

The stable outlook reflects an expectation of continued growth of enrollment and financial resources to better support increased debt levels. We also anticipate at least balanced operating performance as the University adjusts to the end of federal stimulus funding and potentially lower levels of state operating support going forward, as well as no additional borrowing expected in the next two years.

What could change the rating-UP

Substantial increase in liquid financial resources over time and improved student market position coupled with improvement of the Commonwealth's credit profile

What could change the rating-DOWN

Significant deterioration in operating performance; weakening student enrollment; borrowing in excess of amounts currently planned; deterioration of the Commonwealth's credit profile

KEY INDICATORS (FY 2010 financial data and fall 2010 enrollment data)

Total FTE Enrollment: 55,740

Pro-Forma Direct Debt: $2.4 billion

Expendable Financial Resources to Pro-Forma Direct Debt: 0.36 times

Expendable Financial Resources to Operations: 0.34 times

Monthly Liquidity: $725 million

Monthly Days Cash on Hand (unrestricted funds available within 1 month divided by operating expenses excluding depreciation, divided by 365 days): 109 days

Average Operating Margin: 3.2%

% of Revenues from State: 21.6%

Commonwealth Rating: Aa1, stable outlook

RATED DEBT

University of Massachusetts Building Authority:

Series 2009-1, 2009-2, 2009-3, 2010-1, 2010-2, 2010-3: Aa2

Series 2011-1: Aa2/VMIG1 (standby bond purchase agreement provided by Wells Fargo)

Senior Series 2004-A: Baa1 rating based on insurance from National Public Finance Guarantee Corp, formerly MBIA

Senior Series 2008-2: Aa3 rating based on insurance from Assured Guaranty

CONTACTS

University of Massachusetts: David Gray, Senior Vice President for Administration, Finance & Technology, 775-455-7710

Financial Advisor: Jeremy Bass, Public Financial Management, 617-330-6914

PRINCIPAL RATING METHODOLOGY

The principal methodology used in this rating was Public College and Universities published in November 2006.

REGULATORY DISCLOSURES

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

Moody's Investors Service considers the quality of information available on the credit satisfactory for the purposes of assigning a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit 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 ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service 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 the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Kimberly S. Tuby
Analyst
Public Finance Group
Moody's Investors Service

Nicholas Samuels
Backup Analyst
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

MOODY'S ASSIGNS Aa2/VMIG1 RATING TO UNIVERSITY OF MASSACHUSETTS BUILDING AUTHORITY'S $135 MILLION OF SERIES 2011-1 REFUNDING REVENUE BONDS AND AFFIRMS OUTSTANDING RATINGS; OUTLOOK IS STABLE
No Related Data.
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To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

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Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

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 JPY125,000 to approximately JPY250,000,000.

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

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