|[May 12, 2014]
Fitch Updates Rating Criteria for U.S. Colleges and Universities
NEW YORK --(Business Wire)--
Fitch Ratings has updated its sector-specific rating criteria report
titled 'U.S. College and University Rating Criteria'. The report
replaces Fitch's existing rating criteria published on May 10, 2013 and
includes minor new details and clarifications of the risk factors and
metrics considered in Fitch's analytical approach. No changes to
existing ratings are envisioned as a result of the updates to this
Fitch has identified seven key rating drivers that affect the credit
quality of higher education issuers:
--Operational Effectiveness: An institution's ability to effectively
manage enrollment and position itself vis-a-vis competitors is critical
to maintaining or improving its financial position.
--Demand Flexibility: Institutions able to achieve enrollment goals
without sacrificing student quality tend to be less susceptible to
changes in demand and related revenues.
--Fund-raising: Demonstrated fund-raising prowess may enable an
institution to reduce reliance on student-generated funding streams and
fund investments in scholarships, programs, and infrastructure.
--Revenue Diversity and Operating Performance: A lower level of revenue
concentration suggests an unexpected interruption in funding from one
source will not impact an institution's ability to prudently manage
expenditures in line with revenues.
--Balance Sheet Resources and Liquidity: Institutions with a sizable
financial cushion are better protected from an unexpected, material
decline in core revenues and/or unexpected significant increase in costs.
--Debt Burden: The ability of an institution to consistently generate
strong debt ervice coverage may help offset a high pro forma debt
--Management/Governance Evaluated: As part of the analysis of an
institution, Fitch reviews management's capabilities and outcomes, as
addressed in the master Revenue-Supported Criteria, dated June 3, 2013.
This updated criteria report should be read in conjunction with Fitch's
'Revenue-Supported Rating Criteria' published June 3, 2013. The latter,
master criteria report details how Fitch assigns ratings to
revenue-supported obligations and entities in the broader public finance
Both criteria reports are available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: U.S. College and University
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.
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
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