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
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
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
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.