Fitch Rates Florida International University's Housing Revs 'A+'; Outlook Stable
March 15 2012 - 2:10PM
Business Wire
Fitch Ratings assigns an 'A+' rating to approximately $51.65
million of dormitory revenue bonds, series 2012A to be issued by
the State of Florida Board of Governors (the board) on behalf of
Florida International University (FIU).
The fixed rate series 2012A bonds (the bonds) are expected to
price via competitive sale in late March. Proceeds will finance a
620-bed expansion to FIU's student housing system (the system),
refund all or part of the series 1998 housing facility revenue
bonds, fund capitalized interest on the new issue and pay costs of
issuance.
At the same time, Fitch affirms the 'A+' rating on approximately
$22.9 million of outstanding FIU dormitory revenue bonds issued by
the board.
The Rating Outlook is Stable.
SECURITY:
Dormitory revenue bonds are secured by and payable from pledged
net revenues derived from the operations of the system.
KEY RATING DRIVERS:
Strong Operating Performance: The 'A+' rating is supported by
the system's healthy operating performance, driven by strong demand
for and occupancy of on-campus FIU residential facilities. The
primary credit concern relates to the potential increase in system
financial leverage over the next four years as plans to debt
finance a near doubling of on-campus beds are implemented.
Enrollment Growth: Consistent enrollment growth at FIU resulted
in housing demand for the fall 2011 semester exceeding capacity by
at least 400 beds. Expansion of system capacity being funded by the
bonds would have accommodated over 60% of this excess demand.
High Debt Burden: The system's debt burden, based on fiscal 2011
system operating revenues, increases from an already high 27% to
nearly 34% following the issuance of the bonds. Adequate,
consistent coverage of system debt service from net available
revenues partially mitigates this concern.
FIU's Credit Strength: FIU's sound credit profile continues to
be characterized by positive operating performance, fueled by a
diversity of revenue streams, healthy balance sheet resources and a
fairly low debt burden.
Additional information is available at 'www.fitchratings.com'.
The ratings above were solicited by, or on behalf of, the issuer,
and therefore, Fitch has been compensated for the provision of the
ratings.
Applicable Criteria and Related Research:
--'U.S. College and University Rating Criteria' (July 14,
2011);
--'Revenue-Supported Rating Criteria' (June 20, 2011).
For information on Build America Bonds, visit
www.fitchratings.com/BABs.
Applicable Criteria and Related Research:
U.S. College and University Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=640830
Revenue-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=637130
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