Feb 28 - Fitch Ratings affirms the 'F1+' rating on Northwestern University's
(Northwestern) $260.8 million of outstanding Illinois Finance Authority
adjustable-rate revenue bonds and $300 million taxable commercial paper (CP)
program ($60 million currently outstanding).
Revenue bonds and CP are an unsecured general obligation of Northwestern,
payable from all legally available funds.
KEY RATING DRIVERS
FINANCIAL STRENGTH OF NORTHWESTERN: The university maintains a strong financial
profile, fueled by a fairly diverse revenue base; substantial balance sheet
resources; significant fundraising ability; and low debt burden. Fitch maintains
a long-term 'AAA' rating on Northwestern's revenue bonds, with a Stable Rating
RESOURCE SUFFICIENCY: The 'F1+' rating is based on Northwestern's ability to
cover the maximum potential liquidity demands presented by its variable rate
debt programs by at least 1.25 times (x) from internal resources. Such resources
include cash and highly liquid, highly rated investments.
As of Dec. 31, 2012, Northwestern's liquid investment pool, consisting of cash,
cash equivalents and U.S. Government securities, had a balance of $1.04 billion
(after discounts based on asset type and maturity per Fitch's short-term rating
criteria). These liquid assets would cover the university's full $300 million of
authorized CP and $260.8 million of adjustable-rate revenue bonds by a solid
1.86x, exceeding the 1.25x coverage Fitch expects for an 'F1+' rating.
Northwestern intends to convert its outstanding series 2008-B adjustable-rate
revenue bonds ($50 million) on the March 1, 2013 mandatory tender date to weekly
reset mode from annual put mode. The university's remaining $210.8 million of
outstanding adjustable-rate bonds have a mandatory tender on March 3, 2014.
To limit potential calls on its liquidity, the university restricts the amount
of CP notes that may come due on any given day to $50 million. In addition, the
university has access to general purpose bank lines of credit with a combined
limit of $300 million. While these lines of credit are not dedicated solely to a
failed remarketing, they are available to the university for same-day funding.
Northwestern is a selective, comprehensive private university with campuses in
Evanston and Chicago. Fall 2012 full-time equivalent enrollment was 16,000,
relatively flat with the prior year and up 4.1% since fall 2008. Freshman
applications increased 28.3% over this same period, reaching 32,070 for fall
2012. The university's freshman acceptance rate was an impressive 15.4%, with a
solid 41.4% of accepted students choosing to enroll. The university's graduate
programs, which maintain more selective admissions than its undergraduate
programs, account for just over half of total enrollment.
Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Criteria for Assigning Short-Term Ratings Based on Internal Liquidity' (June
--'Northwestern University, Illinois' (March 22, 2012);
--'Fitch Rates Northwestern University's (Illinois) Series 2012 Revs 'AAA';
Outlook Stable' (March 16, 2012).
Applicable Criteria and Related Research
Criteria for Assigning Short-Term Ratings Based on Internal Liquidity
Northwestern University, Illinois