Plans to sell $294.6 million in lease revenue bonds for the University of California via negotiation next week received a AA rating and stable outlook from Fitch Ratings on Nov. 9.
The revenue bonds, which will be issued by the California State Public Works Board, will fund various capital projects at three University of California campuses: Berkeley, Los Angeles and Merced.
The bonds will also make a contribution to the master indenture reserve fund, if necessary, and pay the capitalized interest and costs of issuance.
Fitch also affirmed $2.2 billion of outstanding SPWB lease revenue bonds for the UC system at AA.
The double-A rating, one notch below the university’s general revenue bond rating, reflects UC’s strong credit profile and the pledge of state legislative appropriations supporting the debt, according to the report.
The regents covenant to pay the bonds from lawfully available funds, and have a demonstrated ability and willingness to meet SPWB obligations from UC’s general revenues.
Fitch analysts’ only concern was the university system’s significant and growing unfunded pension and medical benefits liabilities, its recent negative operating performance, and the state’s fiscal health, the report states.