Fitch Ratings this week upgraded the Oregon Health and Science University to A-plus from A as the school prepares to come to market next week with $268 million of revenue bonds.

The outlook is stable.

The Portland-based public university, with schools in dentistry, medicine and nursing, will have $808 million of outstanding debt after the borrowing.

The upgrade reflects OHSU’s improving financial and operating performances, Fitch said.

Enrollment has grown steadily since 2007, and now totals 2,802. The school has responded to state aid drops by raising tuition rates, analysts said.

Operating margins are strong, reaching 2.9% in fiscal 2011 compared to 0.2% in 2008, and 3.1% so far this fiscal year. On the liquidity side, OHSU has 178 days’ cash on hand.

“The stable outlook reflects Fitch’s expectation that OHSU will continue to produce solid operating cash flow due to its strategic initiatives and implementation of productivity and redesign initiatives,” analyst Emily Wong wrote in the rating report. “Fitch believes OHSU’s qualitative factors, primarily its strong relationship with the state, provide rating stability.”

The upcoming borrowing includes $164 million of reven ue bonds and $104 million of variable-rate demand bonds. The VRDBs, divided into three series, are expected to be supported by letters of credit from Union Bank and U.S. Bank.

The school is also expected to borrow another $100 million directly from U.S. Bank as a direct bank loan, Fitch said.

The borrowing will refund $283 million of auction-rate securities and provide $85 million of new money for capital needs, according to Fitch.

After the deal, the school will have shed all of its auction-rate securities, with 73% of its overall debt in a fixed-rate mode and 27% in a variable-rate mode.

It has a 10-year, $1.9 billion capital plan that will be financed largely with cash.

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