Fitch Rtes Mississippi State University Educ. Bldg Corp Rev & Rev Rfdg Bonds 'AA-'

NEW YORK--(Business Wire)--
Fitch Ratings assigns an 'AA-' rating to the following series of fixed-rate
revenue bonds issued by the Mississippi State University Educational Building
Corporation (EBC):

--$29,727,000 revenue bonds, series 2009A-1 (Residence Hall Construction
Project);

--$15,560,000 revenue refunding bonds, series 2009A-2 (Refunding Project).

The bonds are scheduled to sell the week of March 31st through a negotiated
process. EBC bonds are payable from a trust estate, which includes lease
payments made by the board of the State Institutions of Higher Learning (IHL)
from designated revenues generated by the eight academic institutions it
represents. Designated revenues include without limitation net tuition, fees,
and auxiliary enterprise revenues; sales and services, other operating revenues,
state appropriations, and unrestricted net assets. Since fiscal 2003, designated
revenues have increased at an average annual rate of 6.3%, totaling
approximately $1.9 billion as of fiscal year end 2008. Pro-forma maximum annual
debt service of revenue bonds paid from IHL designated revenues is estimated at
$53 million and includes the series 2009A-1 and 2009A-2 bonds, as well as other
series of outstanding debt of the eight academic institutions supported by
designated revenues.

The 'AA-' rating principally reflects the significant coverage provided by the
broad pledge of designated IHL revenues; the essential role played by each of
the state's eight academic institutions, and the University of Mississippi
Medical Center (UMMC), which are represented by the IHL, in furthering the
state's education, research, and health care goals, coupled with the important
coordinating role of the IHL board; healthy enrollment growth across IHL
academic institutions which directly affects the revenue streams from which EBC
bonds are paid; sound financial performance of IHL academic institutions and
UMMC, characterized by positive operating margins and healthy balance sheet
liquidity; and low debt levels, a function of the state's long track record of
funding capital needs on behalf of public academic and health care institutions.

On-going credit risks include the IHL's moderate reliance upon state
appropriations (30.1% of fiscal 2008 revenues) which, in the event of funding
reductions, could pressure IHL's financial profile and weaken the pool of
designated revenue from which EBC bonds are paid; a somewhat limited ability to
handle state funding reductions with sizeable increases in student tuition and
fees given the importance of access and affordability to potential college going
students within the state; and exposure to variable rate demand debt, a portion
of which remains in bank bond mode, though the IHL board is in the process of
remedying the situation.

IHL's financial profile is characterized by sound operating performance and
healthy balance sheet liquidity. During fiscal 2008, IHL academic institutions
and UMMC generated an operating margin of 3.2%, which is in-line with prior
fiscal years. This track record of surplus operations has lead to consistent
growth in available funds, or cash and investments not permanently restricted.
For fiscal 2008, available funds increased to approximately $602 million,
representing approximately 24.3% of operating expenditures and a strong 101.5 %
of pro-forma leverage, respectively. The IHL's relatively low debt levels, which
are further evidenced by a debt burden which has been at or just below 3% since
fiscal 2003, is largely the result of the state of Mississippi's (general
obligation bonds rated 'AA' by Fitch) consistent and significant funding of IHL
member institution (including UMMC) operating and capital needs over time. While
state funding was slightly reduced for fiscal 2009, the state has indicated an
intention to restore such reductions in fiscal 2010. A prolonged economic
recession could, however, impede the state's ability to deliver on this promise
as well as potentially result in more significant funding reductions going
forward. Fitch recognizes the IHL maintains a considerable financial cushion to
deal with funding reductions, though notes the strength of the designated
revenue pledge could weaken during a severely economic downturn.

Founded in 1844, the IHL represents the state's eight academic institutions,
including MSU, Alcorn State University, Delta State University, Jackson State
University, University of Mississippi, Mississippi University for Women,
Mississippi Valley State University, and the University of Southern Mississippi.
It also includes the University of Mississippi Medical Center. Enrollment at IHL
member institutions totaled 71,151 for fall 2008, increasing, on average, by
approximately 1% since fall 2003. Proceeds of the series 2009A-1 and 2009A-2
will be used by MSU, the largest member of the IHL, to fund construction of a
350-bed dormitory, and current refund approximately $15.6 million of outstanding
fixed-rate MSU EBC series 1998 bonds.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, 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 Ratings, New York
Douglas J. Kilcommons, +1-212-908-0740
Eric Kim, +1-212-908-0527
Cindy Stoller, +1-212-908-0526 (Media Relations)
cindy.stoller@fitchratings.com

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