TEXT - Fitch affirms Texas A&M University System short-term rating
Jan 6 - Fitch Ratings has affirmed the 'F1+' rating on Texas A&M University System's $300 million tax-exempt Revenue Financing System (RFS) commercial paper (CP) program. SECURITY RFS debt is secured by a lien on and pledge of all legally available revenues and fund balances of the Texas A&M University System (TAMUS, or the system). KEY RATING DRIVERS SUFFICIENT LIQUID RESOURCES: The 'F1+' rating is based on TAMUS's ability to cover the maximum potential liquidity demands presented by its tax-exempt, RFS CP program by at least 1.25x from internal resources. STRONG FINANCIAL PERFORMANCE: TAMUS has consistently demonstrated strong financial characteristics, including a relatively diverse revenue base, historically positive operating results, a manageable debt burden and adequate balance sheet flexibility. Fitch rates TAMUS's long-term RFS pledge 'AA+' with a Stable Outlook. CREDIT PROFILE The 'F1+' rating is based on the availability of adequate highly liquid, highly rated securities to cover the liquidity demands presented by TAMUS's RFS CP program. The CP program has a maximum authorization of $300 million. As of Dec. 31, 2012, the system's liquid assets totaled $972.1 million, providing 3.24 coverage of the maximum authorized amount. Fitch views this level as healthy, and consistent with the expectation for the highest short-term rating. Per criteria, a minimum of 1.25x coverage is expected to achieve the 'F1+' level. The system does not maintain any exposure to variable rate debt instruments aside from its CP programs. At present, $192 million is outstanding in the RFS CP program, versus the maximum authorization of $300 million. Compared to the actual amount outstanding, liquid assets provide a stronger 5.06x coverage. The strength of the system's operations further support the short-term rating. Rated 'AA+' with a Stable Outlook by Fitch, the system's annual financial results have averaged 3.8% over the past five fiscal years (2008 - 2012), including a strong 5.3% in fiscal 2012. TAMUS's operating budget is supported by diverse revenues - in fiscal 2012, student-generated revenues provided the greatest percentage of revenues at 27.2%, followed by state appropriations at 26.7% and grant and contract revenue at 24.8%. Consistency in these key revenue streams and the related operating performance support the ongoing affordability of the TAMUS's debt burden and growth in overall financial resources which Fitch views favorably. TAMUS consists of 11 academic institutions, seven research and service agencies, and a health sciences center. Since fall 2007, total headcount increased at an average annual rate of 3.7% to 122,435 in fall 2011. The flagship campus is located in College Station, Texas.