S&P Upgrades Texas Tech University System

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DALLAS – Texas Tech University System has earned a one-notch credit upgrade to AA-plus from Standard & Poor’s based on growing enrollment and a strengthening financial profile.

“We assessed TTUS' financial profile as extremely strong, characterized by exceptional available resources and relatively low debt levels,” analyst Robert D. Dobbins wrote in the report Thursday.

The upgrade comes a year after Moody’s raised its rating to Aa1. With Fitch Ratings at AA-plus, all three ratings agencies carry equivalent ratings.

Outlooks are stable.

“The stable outlook reflects our expectation that during the two-year outlook period, TTUS will continue its steady enrollment growth and maintain positive full-accrual financial operations and financial resources relative to the rating category,” Dobbins wrote. “We do not anticipate additional debt at this time that would materially affect available resource ratios during the outlook period.”

Headquartered at Texas Tech’s flagship campus in Lubbock, TTUS has four major operating institutions, including the Health Science Centers in Lubbock and El Paso and Angelo State University in San Angelo.

The medical school in El Paso was established in 2014 and currently enrolls about 500 students at schools of medicine, nursing, and biomedical sciences.

“In our view, the system has good geographic diversity due to the depth and breadth of the Texas market,” Dobbins said. “Over 90% of students are Texans. As such, our assessment of the system's economic fundamentals is anchored by Texas' GDP per capita.”

For fall 2015, enrollment increased 6% from the previous year to 49,440 full-time students.

“Demand, as measured by freshmen applications for TTU, is good, in our view, with a 12.1% increase for fall 2015 from the previous year, totaling 41,238 for the system,” Dobbins wrote. “While selectivity measures are adequate for the rating category, they have historically been weak compared to peers.”

The system has about $646 million of outstanding debt, according to S&P.

In 2015, the Texas Legislature approved $226 million of tuition revenue bonds for the Texas Tech System as part of a $3.1 billion authorization for all state college and universities in the state. Regents last year took the first steps building a $77 million experimental sciences building on the Lubbock campus to be financed TRBs and revenue finance system debt.

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