Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Enter the above code here:
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Rating Action:

Moody's assigns Aa2 to Oberlin College's (OH) $55 million of Series 2013 Revenue Bonds, outlook to negative

Global Credit Research - 05 Aug 2013

Rating action impacts $183.1 million of rated debt—including the new issuance

New York, August 05, 2013 --

Moody's Rating

Issue: Higher Educational Facility Revenue Bonds (Oberlin College 2013 Project); Rating: Aa2; Sale Amount: $55,000,000; Expected Sale Date: 8/9/2013; Rating Description: Revenue: 501c3 Unsecured General Obligation

Opinion

NOTE: On September 18, 2013, the press release was revised as follows: In the first paragraph, the Series 1993 Bonds were replaced with the Series 1999 bonds. Revised release follows.

Moody's Investors Service has assigned an Aa2 rating to Oberlin College's (OH) $55 million Series 2013 Revenue Bonds to be issued through the Ohio Higher Educational Facility Commission. We have also affirmed the Aa2 ratings on Oberlin College's (Oberlin's) Series 1999, 2003 and 2009 revenue bonds as well as the Aa2/VMIG 1 rating on the Series 2008 bonds. The Series 2003 bonds are anticipated to be fully refunded by the issuance of the Series 2013 bonds. The VMIG 1 rating on the Series 2008 bonds reflects the combination of Oberlin's financial strength and a Standby Bond Purchase Agreement (SBPA) provided by U.S. Bank, N.A. (rated Aa3/P-1). The Aa2 rating is based on Oberlin's national student demand, healthy financial reserves and liquidity, and demonstrated fundraising ability. The negative outlook reflects relatively thin annual operating performance and a balance sheet that is becoming increasingly leveraged.

SUMMARY RATING RATIONALE

The Aa2 rating reflects Oberlin's distinctive market position as a highly regarded and progressive liberal arts college with a nationally renowned music conservatory, healthy student demand contributing to growing net tuition revenue, strong liquidity, and active donor support. The negative outlook reflects limited growth in financial resources when compared to similarly rated peers as the college has invested cash flow in capital projects. The negative outlook also is based on recently tightened operating performance combined with increasing leverage.

The VMIG 1 rating related to the Series 2008 variable rate bonds is derived from the credit quality of the bank as provider of the liquidity facilities rather than Moody's assessment of Oberlin's own liquidity.

CHALLENGES

* The college's financial reserves remain well below 2008 levels, with $715 million of total financial resources in 2012 compared to $807 million in 2008. Many of the college's peers have seen their balance sheets rebound to pre-2008 levels, leaving Oberlin in a comparatively weaker position.

* Leverage from both a balance sheet and income perspective is increasing with the issuance of $15 million of new debt now and up to $17 million of new debt expected to be issued later this year. Pro-forma debt to operating revenue will increase to 1.28 times with this issue, well above the 2012 median of .85 times, and will increase further with the fall's planned issuance.

* Operating performance is muted with an operating cashflow margin of 12.9% in FY 2012, below prior years as well as slightly below Moody's 2012 median for similarly rated peer institutions of 13.5%. Oberlin's average debt service coverage of 1.88 times in FY 2012 was lower than the 2012 Aa median of 2.93 and additional debt will further depress this metric without growth in endowment assets.

STRENGTHS

* Oberlin sustains a national student market position as a small liberal arts college in Ohio with a highly regarded conservatory of music. Demand for the college is evident in a 31% acceptance rate of freshman applicants and with 91% of the fall 2013 freshman class coming from outside of Ohio.

* Expendable resources of $474 million in FY2012 provided a still solid cushion for pro-forma debt (2.4 times inclusive of August borrowing) as well as for operations, 2.9 times. Liquidity is ample and the college plans to restructure outstanding 2008 variable rate debt to eliminate the demand feature later this year, further reducing liquidity risk.

* A large base of donors provides active support for capital projects and endowment growth, with a $250 million capital fundraising campaign successfully underway. Three year average gift revenue has grown significantly to nearly $30 million in 2012, compared to $19 million in 2008.

* Tuition revenues have grown steadily with net tuition per student increasing to $24,192 in FY 2012, a 13% increase over 2008 levels.

OUTLOOK

The negative outlook reflects financial reserves that have not rebounded to pre-2008 levels combined with increasing leverage and recently weaker operating performance.

WHAT COULD MAKE THE RATING GO UP / OUTLOOK RETURN TO STABLE

An upgrade is not likely in the near term given the negative outlook. The outlook could return to stable with substantial growth in cash and investments, sustained improvement in operating performance, and significant improvement in average debt service coverage.

WHAT COULD MAKE THE RATING GO DOWN

A downgrade could result from deterioration in operating performance, decreased student demand, and new debt beyond current expectations.

The principal methodology used in the long term rating was U.S. Not-for-Profit Private and Public Higher Education published in August 2011. The principal methodology used in the short term rating was Variable Rate Instruments Supported by Conditional Liquidity Facilities published in May 2013. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

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.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

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.

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

Heidi Wilde
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

Diane F. Viacava
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 Oberlin College's (OH) $55 million of Series 2013 Revenue Bonds, outlook to negative
No Related Data.

 

© 2014 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 INVESTORS SERVICE, INC. ("MIS") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATION") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. 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. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S 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. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S 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.

 


MOODY'S CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS FOR RETAIL INVESTORS TO CONSIDER MOODY'S CREDIT RATINGS OR MOODY'S PUBLICATIONS IN MAKING ANY INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

 


ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.

 


All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. 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 or in preparing the Moody’s Publications.

 


To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

 


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.

 


NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

 


MIS, 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 MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS 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 "Shareholder Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

 


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 clients. It would be dangerous for "retail clients" to make any investment decision based on MOODY'S credit rating. If in doubt you should contact your financial or other professional adviser.

© 2014 Moody's Investors Service, Inc., Moody’s Analytics, Inc. and/or their affiliates and licensors. All rights reserved.
Regional Sites: