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TMCNet:  Fitch Affirms Ohio State University's (OH) Short-Term Rating at 'F1+'

[December 12, 2013]

Fitch Affirms Ohio State University's (OH) Short-Term Rating at 'F1+'

NEW YORK --(Business Wire)--

Fitch Ratings affirms the 'F1+' rating on approximately $446.4 million of outstanding variable rate demand general receipts bonds (GRBs) issued by The Ohio State University (OSU or the university).

SECURITY

GRBs are secured by a pledge of unencumbered revenues of The Ohio State University.

KEY RATING DRIVERS

FLAGSHIP CREDIT CHARACTERISTICS: OSU, the state's flagship public university and premier research institution, exhibits consistently positive financial performance that is fueled by a fairly diverse revenue base; with solid balance sheet resources and liquidity; and a manageable debt burden. Fitch rates OSU's general revenue bonds 'AA', with a Stable Rating Outlook.

RESOURCE SUFFICIENCY: The 'F1+' rating is based on OSU's ability to cover the maximum potential liquidity demands presented by its variable rate debt obligations by at least 1.25x from internal resources.

RATING SENSITIVITIES

REDUCTION IN LIQUID RESOURCES: Material erosion in internal liquid resources and/or significant downward movement in OSU's long-term rating, while unlikely, will influence the short-term rating.

CREDIT PROFILE

As of June 30, 2013, OSU had approximately $446.4 million of variable rate demand bonds (VRDB) outstanding. In the event of a failed remarketing, OSU would draw upon its internal liquidity for support. As of September 30, 2013, OSU's Short and Intermediate Term Non-Endowment Investment Pool had a market value of $1.85 billion, and includes cash, government securities and corporate obligations. When including just the cash component of the pool, the value declines, but remains a healthy $768 million. This cash portion alone would provide 1.72X coverage of OSU's VRDBs, exceeding the 1.25X coverage Fitch expects for an 'F1+' rating.

Founded n 1870 as the Ohio Agricultural and Mechanical College, a land grant institution, OSU is one of 13 publicly supported state universities of higher education within Ohio. The university's main campus, which accounts for approximately 90% of total headcount and houses several of the hospitals comprising OSUHS and the medical center, is located in Columbus, the state capital. During fall 2013, the Columbus campus enrolled 57,466 students, making it one of the largest individual campuses in the United States. Similar to the demand profile of many flagship public universities, OSU has generally experienced rising application levels which have enabled it to implement more rigorous admissions standards, notably in Columbus, and tighten academic quality.

The consistent profitability of The Ohio State University Health System (the clinical care components of The Ohio State University Medical Center and an integral part of the university) continues to be driven by healthy volume and utilization trends.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Criteria for Assigning Short-Term Ratings Based on Internal Liquidity' (June 13, 2013);

--'Fitch Affirms The Ohio State University's General Receipts Bonds at 'AA'; Outlook Stable (Jan. 8, 2013).

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=811626

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.


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