|[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).
GRBs are secured by a pledge of unencumbered revenues of The Ohio State
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.
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.
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+'
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
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).
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DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
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AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
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