NEW YORK - Moody's Investors Service said it has removed from watchlist for possible downgrade the rating on the Research Foundation of the State University of New York's (SUNY) Series 2002A variable-rate demand bonds. The rating has been downgraded to A1/VMIG 1 from Aa3/VMIG 1. The rating outlook is stable. The tender feature of the bonds is supported by the Foundation's own liquidity.

Moody's rating on the Research Foundation reflects its role as the fiscal administrator of sponsored research for SUNY (university system rated Aa2), with over $940 million of grants and contract revenue in FY 2011.

The rating action primarily reflects the Foundation's negative net assets due to a large post-retirement health liability and growth of other liabilities, beyond the rated bonds, including drawings on a line of credit, expanding role in supporting development of facilities for industry partners and sizeable annual operating lease payments. The VMIG1 portion of the rating is based on the Foundation's availability of assets with daily liquidity to cover a potential failed remarketing of the bonds.

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