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I AGREE
28 Aug 2015
$900M rated debt
New York, August 28, 2015 --
Moody's Rating
Issue: Revenue Refunding Bonds, Series 2015 (Mississippi Valley
State University Facilities Refinancing); Rating: Aa2;
Sale Amount: $17,125,000; Expected Sale
Date: 09-08-2015; Rating Description: Revenue:
Public University Broad Pledge
Opinion
Moody's Investors Service assigns a Aa2 rating to Mississippi Institutions
of Higher Learning's proposed $17.1 million Revenue Refunding
Bonds, Series 2015 (final maturity 2037) issued by Mississippi Valley
State University Educational Building Corporation (MVSUEBC). The
long-term rating outlook is stable.
SUMMARY RATING RATIONALE
Mississippi Institutions of Higher Learning's Aa2 reflects the pledge
of all legally available revenues to meet lease rental obligations funding
debt service.
The rating favorably incorporates strong system-wide student demand,
moderate leverage, favorable debt service coverage and ample financial
resources.
Challenges include patient care exposure through University of Mississippi
Medical Center (UMMC) with very high reliance on government payers,
ongoing campus capital needs and challenging research funding trends.
OUTLOOK
The stable outlook reflects expected continued favorable student demand,
positive cash flow generation, adequate balance sheet reserves and
ongoing state support. The UMMC bonds have a separate security.
Both are currently Aa2 stable but the rating or outlook for one could
move separately due to pressured operating performance and debt service
coverage, liquidity or pledged revenues relative to outstanding
debt and debt service.
WHAT COULD MAKE THE RATING GO UP
• Significant growth in balance sheet resources
• Strengthening in student demand evidenced by enrollment growth,
particularly from non-resident students and increasing net tuition
per student revenues
WHAT COULD MAKE THE RATING GO DOWN (IHL)
• Consistently weaker operating cash flow and debt service coverage
• Significant reduction in state support
• Material debt increase relative to financial resources and cash
flow
WHAT COULD MAKE THE RATING GO DOWN (UMMC)
• Downgrade in IHL's rating
• Sustained deterioration in hospital operations
OBLIGOR PROFILE
Founded in 1943 by amendment to the state constitution, the twelve-member
Board of Trustees of the IHL oversees all of the state's eight public
higher education institutions and University of Mississippi Medical Center.
LEGAL SECURITY
The Series 2015 bonds are secured by MVSUEBC's lease payments from the
Board of Trustees of State Institutions of Higher Learning of the State
of Mississippi (IHL board). IHL's lease obligation is on parity
with its other leases supporting IHL bonds and MSU's Extendable Commercial
Paper, all issued through the member universities' Educational Building
Corporations. The board covenants that it will use appropriate
designated revenues to make rental payments and any legally available
funds. Designated Revenues and Fund Balance totaled $1.83
billion for the eight universities in FY 2014, up from $1.71
billion in FY 2013.
The board's lease agreements run for the life of the related bonds.
The lease payments are sufficient to pay principal (whether at maturity
or prior redemption or by acceleration or otherwise) and interest and
are not subject to abatement. IHL pays the lease payments directly
to the Trustee. The board's ability to assign its interest in the
lease is highly limited and would require written consent of the Trustee.
USE OF PROCEEDS
The proceeds of the Series 2015 Bonds will be used to advance refund all
or a portion of MSVU's outstanding Revenue Bonds, Series 2007 and
pay issuance costs.
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.
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Diane F. Viacava
VP - Senior Credit Officer
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
Dennis M. Gephardt
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 assigns Aa2 to Mississippi Institutions of Higher Learning $17.1M Rev. Ref. Bds., Series 2015; outlook stable
No Related Data.
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