LOS ANGELES — Moody's Investors Service on June 5 upgraded the California Educational Facilities Authority Pooled College and University Projects 1999B pool rating to Baa1. The outlook is positive.

The rating agency also affirmed CEFA's 2007 pool rating to Baa3 with a stable outlook.

The upgrade affected $23.8M of rated CEFA pool debt.

The upgrade on the CEFA Pool 1999 Series B bonds is driven by a change in relative share in the pool due to the full redemption of Baa3-rated Otis College of Art and Design's portion of the pool on June 3.

California Lutheran University, rated Baa1 with a positive outlook, is now the sole participant in the Series 1999B bonds.

The Baa3 rating for the Series 2007 CEFA Pool Revenue Bonds is based on the "Weak Link Plus" approach, which places a greater emphasis on the probability of default by the weakest participant in the pool.

All three institutions participating in the Series 2007 pool are rated Baa3: California College of the Arts, rated Baa3 with a positive outlook; Dominican University, rated Baa3 with a stable outlook; and Woodbury University, rated Baa3 with a negative outlook.

CEFA's pooled financing is unenhanced, with each institution responsible only for its portion of total debt service.

The positive outlook on the Series 1999B and the stable outlook on the Series 2007 incorporate the credit fundamentals, including market position, operating performance, and operating and financial leverage, of the pool participants.

The rating could change due to the rating changes of the individual participants and also due to the change in relative share in the pool due to scheduled maturities and refundings, according to the report.

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