Fitch Confirms University of Virginia CP Rating at 'F1+'

Business Wire, Oct 6, 2008

NEW YORK -- Fitch Ratings confirms the 'F1 ' rating on The Rector and Visitors of the University of Virginia (the university) commercial paper (CP) general revenue pledge notes, series A (tax-exempt) and series B (taxable). The university recently approved an increase in maximum CP program authorization from $175 million to $300 million, providing increased market flexibility and expanded capacity to meet capital expenditures. CP notes are issued to finance and refinance capital projects and cash requirements on an interim basis and are secured by all available funds of the university on parity with outstanding general revenue pledge bonds.

The 'F1 ' rating is primarily based upon the university's financial resources available to cover maximum liquidity demands. As of Sept. 19, 2008, the university identified approximately $1.3 billion of liquid funds available to meet the failed remarketing of variable-rate demand bonds ($82 million) and/or the failed rollover of CP notes. Of this $1.3 billion pool, approximately $482 million represents same-day available funds. Same-day available funds includes balances held by the university and the University of Virginia Medical Center (the medical center, $57 million); highly liquid investments held and administered by the University of Virginia Investment Management Company on the university and medical center's behalf ($175 million); and two Bank of America credit lines ($250 million). The terms of the bank credit lines meet Fitch's requirements for inclusion as same-day liquidity.

Under a stress scenario where the university was unsuccessful in redeeming outstanding CP drawn to the maximum authorized level ($300 million), and unable to remarket variable-rate demand bonds ($82 million), same-day available funds would provide 1.26 times (x) coverage of debt requiring liquidity. Importantly, Fitch recognizes that the university limits the amount of commercial paper to mature in a single day to $40 million, thereby minimizing the potential daily call on liquidity. The university's procedures for accessing liquidity, including the timing of draws and the parties responsible, are comprehensive, reflecting the quality and experience of university management.

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.