Fitch Rates Johns Hopkins University Revs 'AA+'

Business Wire, July 2, 2008

NEW YORK -- Fitch assigns an 'AA ' rating to approximately $132,640,000 of fixed-rate revenue bonds and an 'AA /F1 ' to approximately $125,855,000 of variable rate revenue bonds issued by Maryland Health and Higher Education Facilities Authority on behalf of Johns Hopkins University (JHU). The series 2008A bonds are expected to price on or about July 23, 2008, while the series 2008B bonds are expected to price in early August.

At the same time, Fitch affirms the following ratings on JHU's debt portfolio:

--'AA ' on $441,965,000 fixed revenue bonds;

--'AA /F1 'on $69,265,000 variable rate revenue bonds;

--'F1 ' on $400,000,000 commercial paper program (taxable and tax-exempt).

The Rating Outlook is Stable.

The long-term 'AA ' rating reflects:

--JHU's status as a premier comprehensive research university, with a strong reputation in medical education, arts and sciences, and graduate professional degree programs;

--Favorable student demand trends which have lead to highly selective admissions and exceptionally strong student quality;

--A track record of positive operating performance, with recent margin deterioration driven by programmatic and facility investments and other one-time expenses;

--Substantial balance sheet resources supported by a diversified, well-managed investment portfolio and significant fundraising abilities;

--An experienced management team which excels in coordinating the diverse operating and capital priorities of JHU's schools and divisions; and

--The close working relationship with the 'AA' rated Johns Hopkins Health System, the parent entity of an independently governed and incorporated academically based health system which includes JHU Hospital, JHU's primary teaching facility for its School of Medicine.

Primary credit concerns include:

--The expansive scope of JHU's operations which will necessitate on-going investment in physical plant and academic capacity, portions of which will likely be debt financed;

--JHU's dependence on federally sponsored research funding, and the related recovery of indirect costs, for approximately 60% of its operating budget; and

--The potential for stagnant and/or reduced federal funding of research, though JHU's leading position in the funding hierarchy and its collaborative approach to research activities help to mitigate this risk.

The short-term 'F1 ' rating reflects the availability of highly liquid, highly rated securities immediately available to meet the failed remarketing of variable rate demand obligations or commercial paper. As of May 31, 2008, JHU identified approximately $770 million of cash and investments, accessible within a day or less, to support variable-rate debt ($393.9 million). In addition to these balances, JHU maintains two standby lines of credit ($350 million) which can be drawn upon in the unlikely event of a shortfall in internal liquidity.

Proceeds of the series 2008A bonds will fund various capital plan projects and/or refinance related commercial paper borrowings. Proceeds of the series 2008B bonds will refund all of outstanding series 1997 bonds ($12.1 million) and the majority of outstanding series 1998 bonds ($125.9 million).

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.