Tufts University, MA's Revenue Bonds Rated 'AA-'; Outlook Stable
NEW YORK (Standard & Poor's) July 23, 2004—Standard & Poor's Ratings
Services assigned its 'AA-' rating to Massachusetts Health and Educational
Facilities Authority's $54 million revenue bonds, series 2004K, issued for
Tufts University. The outlook is stable. The sale date is August 15.
In addition, Standard & Poor's affirmed its 'AA-' rating and 'AA-'
underlying rating (SPUR) on the university's outstanding debt.
"The 'AA-' rating reflects the university's impressive demand indicators,
evidenced by an acceptance rate of 26%, a matriculation rate of 34%, and
average entering freshman SAT score of 1416 for fall 2003, levels well
above the national average; its history of strong financial operations,
evidenced by revenue diversity and consistent annual surplus generation;
its comprehensive program offering; and active and successful
fundraising," said Standard & Poor's credit analyst Marc Savaria.
Offsetting factors include lagging liquidity levels for the current
rating category and issuance of additional debt in the near future.
Series K bond proceeds will be used to finance several major capital
projects, including the acquisition of a 68,825-square-foot building for
administrative purposes, research and lab renovations, and routine capital
expenditures on existing buildings.
The bonds are a general obligation of the university.
The university enjoys a broad revenue base, grounded by student-generated
fees (54%), government grants and contracts (18%), endowment and private
gifts (16%), clinical operations (11%), and other educational activities.
Strict oversight of the budget has resulted in average annual operating
surpluses of about 4.6% over the past 5 years. For fiscal 2003, the
university ended with a solid operating surplus of $19.4 million.
The total increase in 2003's unrestricted net assets was $32.3 million,
as the higher bottom line result reflects mainly a strong operating
surplus, positive market returns, and other nonoperating activities.
Liquidity levels lagged the average for the rating category. At fiscal
year-end 2003, expendable resources were roughly $655 million, and equaled
nearly 1.3x operating expenses and 2.3x pro forma debt. Following the
issuance of the series K bonds, debt will be roughly $283 million.
Maximum annual debt service is expected to remain low at approximately
$23.5 million, or 4.7% of budget. The repayment for the series K will be
through the operating budget.
The stable outlook anticipates that the university will continue to
generate good operating surpluses, increase its liquidity levels, and
maintain its demand profile.
Tufts University is a private, nonprofit, nonsectarian, coeducational
university with three Massachusetts campuses, and is composed of 12
colleges and schools including professional programs in medicine,
veterinary medicine, dentistry, international diplomacy and law, and
engineering. Approximately 4,850 students are enrolled in undergraduate
programs, and 4,525 in graduate programs.
Complete ratings information is available to subscribers of
RatingsDirect, Standard & Poor's Web-based credit analysis system, at
www.ratingsdirect.com. All ratings affected by this rating action can be
found on Standard & Poor's public Web site at www.standardandpoors.com;
under Credit Ratings in the left navigation bar, select Find a Rating,
then Credit Ratings Search.
| Credit Analyst: |
Marc Savaria, Boston (1) 617-530-8315 Mary Peloquin-Dodd, New York (1) (212) 438-2079 |
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