OSU Gets Ratings Boost

Oklahoma State University’s credit rating was increased last week by Standard & Poor’s to AA-minus from A-minus with a stable outlook. The new rating applies to OSU’s outstanding athletic facility revenue bonds, recreational facility bonds and student union revenue bonds.

The AA-minus rating also applies to $64.4 million of general revenue debt to be issued by the Oklahoma A&M College Board of Regents in July on behalf of Oklahoma State. Standard & Poor’s assigned an SP-1-plus short-term rating to the planned issuance of $150 million of taxable bond anticipation notes.

The Bans will be secured by proceeds from OSU revenue bonds that will be issued before August 2011.

The university’s outstanding debt of approximately $130 million does not include $113 million of lease revenue bonds issued by the Oklahoma Capitol Improvement Authority, which are supported by state appropriations.

Standard & Poor’s credit analyst Bianca Gaytan-Burrell said the revised rating reflects OSU’s position as one of the state’s flagship universities and strong legislative support. Total debt service is 3% of annual expenditures.

She said challenges for the university include a slight drop in enrollment due to Oklahoma’s high school demographics, and additional planned debt and capital plans.

With the Bans, OSU’s financial structure will be 30% short-term debt with significant reliance on market access for permanent financing, according to Gaytan-Burrell.

“We expect that OSU will continue to produce positive operating performance on a full accrual basis, maintain adequate financial resources, stabilize its enrollment, and continue to receive state support,” she said.

The revenue bonds and Bans are rated AA-minus by Fitch Ratings. OSU’s revenue bonds are rated A1 by Moody’s Investors Service.

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