RFS debt is a special obligation secured by a lien and pledge of all legally available revenues and fund balances of the system. The RFS CP is issued on parity with outstanding RFS bonds.
KEY RATING DRIVERS
FINANCIAL STRENGTH OF TAMUS: The university (RFS bonds rated 'AA+' by Fitch) maintains a strong financial profile supported by consistently positive operating results, a diverse revenue base, substantial balance sheet resources, manageable debt burden, and solid student demand. The university also benefits from a 1/3 interest in
SUFFICIENT LIQUID RESOURCES: The 'F1+' rating is based on TAMUS' ability to cover the maximum potential liquidity demands presented by its tax-exempt RFS CP program by at least 1.25x from internal resources. Such resources include university-held cash and highly liquid, highly rated investments.
MATERIAL DECLINE IN LIQUID INVESTMENTS: While not expected, the 'F1+' rating could be pressured by a decline in available liquid investments such that coverage of the outstanding RFS CP falls below the 1.25x minimum expected by Fitch.
TAMUS is one of two public flagship university systems in
TAMUS benefits from a diversified revenue base, with three primary revenue streams contributing approximately equally to operating revenues. In fiscal 2013, major operating revenues came from student-generated revenues and grant and contract revenues (each about 27%), and state appropriations (about 23%).
TAMUS' operations are historically positive, consistent with Fitch's expectations for a public college or university. Operating margins averaged 3.8% over the last five fiscal years, including a strong 5.5% surplus in fiscal 2013.
Balance sheet resources remain solid. Available funds, defined by Fitch as cash and investments less restricted non-expendable and certain expendable net assets, were approximately
The system provides self-liquidity for its RFS CP program, which has a maximum authorization of
Additional information is available at 'www.fitchratings.com'
--'Rating U.S. Public Finance Short-Term Debt',
--'U.S. College and University Rating Criteria',
--'Fitch Rates Texas A&M Univ. System Rev Financing System Bonds 'AA+'; Outlook Stable',
Rating U.S. Public Finance Short-Term Debt
Source: Fitch Ratings
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