Since the inception of UCONN 2000, the University’s bond issues have experienced a favorable credit rating history, including several credit rating upgrades. For example, as of September 15, 2005 Moody’s assigned an “Aa3” rating to both the University’s General Obligation Bonds secured by the State’s Debt Service Commitment and the University’s Special Obligation Student Fee Revenue Bonds. It is a strong vote of confidence in the University that both these ratings are ranked the same as the State’s General Obligation Bond “Aa3” credit rating.
The capital markets have recognized the tangible benefits to the State’s economy of meeting the infrastructure and educational goals of the program, as well as the University’s success in implementing them. A high quality credit rating not only provides the State and the University with less expensive access to the capital markets but also supports the State’s quality reputation among investors. A University milestone occurred in 2002 with the achievement of the high-grade “double A” credit-rating category from Moody’s Investors Service for both its General Obligation and Special Obligation bonds.
Current Credit Ratings as of September 15, 2005
As of September 15, 2005, the UCONN 2000 General Obligation Debt Service Commitment bonds were rated “AA” by Standard & Poor’s; “Aa3” by Moody’s Investors Service; and “AA-” by Fitch Investors Service. Also the University’s Special Obligation Bonds not secured by SCRF were rated “AA-” by Standard & Poor’s and “Aa3” by Moody’s Investors Service. Fitch Investors Service does not rate the Special Obligation bonds not secured by SCRF. The Special Obligation Bonds Series 1998-A carry a Special Capital Reserve Fund and are rated “AA” by Standard & Poor’s, “Aa3” by Moody’s, and “AA-“by Fitch. In addition to the underlying credit ratings, “AAA” rated municipal bond insurance secures certain maturities of several of the above bond issues.
Credit Rating History
February 1996: the first issue of the University’s General Obligation Bonds secured by the State’s Debt Service Commitment carried underlying ratings of “A1” by Moody’s Investors Service, “AA-” by Standard & Poor’s and “AA-” by Fitch.
February 1998: the first issue of UCONN 2000 Special Obligation bonds depended upon the State’s SCRF credit rating. An underlying “stand-alone” credit rating was not available for this nascent program. At the time of issuance, the State SCRF enhancement allowed the bonds to obtain an “AA-” rating from Standard & Poor’s, “AA-” from Fitch Investors Service, and “A-1” from Moody’s Investors Service. The bonds were subsequently covered by municipal bond insurance and upgraded to “AAA” at Fitch and Standard & Poor’s and “Aaa” at Moody’s Investors Service.
October 1998: Standard & Poor’s upgraded the UCONN 2000 General Obligation DSC Bonds and the UCONN 2000 SFR 1998-A (SCRF) bonds to “AA” from “AA-”.
March 2000: Moody’s upgraded UCONN 2000 General Obligation DSC Bonds to “Aa3” from “A1”.
June 2000: the University achieved a milestone with its first underlying Special Obligation Bond “stand alone” credit rating of “AA-” Standard & Poor’s and an “A1” Moody’s.
February 2001: Moody’s upgraded UCONN 2000 General Obligation DSC Bonds to “Aa2” from “Aa3”. In April 2001, the General Obligation DSC 2001 Series A bonds were sold without any bond insurance security enhancement on any maturity, another successful first-time accomplishment for the UCONN 2000 bond program. Moody’s upgraded UConn’s SFR 1998-A Bonds, which are secured by the State SCRF, at this time to “Aa3” from “A1”.
January 2002: UCONN 2000 Special Obligation Bonds (Non-SCRF) were upgraded to “Aa3” from “A1” by Moody’s. This graduated UConn’s Special Obligation bonds to Moody’s “high-grade” bond category and impacted the underlying credit on all outstanding Special Obligation Student Fee Revenue Bonds. (The $33.6 million Special Obligation Student Fee Revenue Series 1998-A bonds, additionally secured by the State’s SCRF, already carried the “Aa3” rating.) This high rating was assigned a stable outlook and represented a positive judgment by the capital markets regarding UConn’s financial strength, real and potential growth as an institution, and management.
August 2002: Reflecting the outlook changes for the State’s General Obligation Bonds, Moody’s and Standard and Poor’s both moved their outlook from “stable” to “negative” for UCONN2000 General Obligation DSC Bonds while retaining their respective credit rating levels at “Aa2” and “AA”. Fitch took no action. In a sign of confidence in the University’s management and growth potential, Moody’s and Standard & Poor’s kept UConn’s Special Obligation Bond ratings levels and stable outlook unchanged.
March 2003: During tougher economic times, the rating agencies confirmed the University’s General Obligation DSC bond ratings as follows: Fitch “AA-“; Standard & Poor’s “AA”; and Moody’s “Aa2”. Moody’s also confirmed UConn’s Special Obligation and Foundation bond ratings at “Aa3”. Holding the credit ratings was a good sign in light of Moody’s February 2003 move of the State General Obligation bonds and consequently the University’s DSC and SCRF security bonds to watch list for possible downgrade.
July 2003: On July 2, 2003, citing State budget problems, Moody’s downgraded the University’s General Obligation DSC bond ratings to “Aa3” from “Aa2” consistent with its action on the State General Obligation bond rating. The good news was that Moody’s confirmed UConn’s Special Obligation (non-SCRF) bond ratings at “Aa3”. Moody’s also briefly downgraded the University’s 1998 Special Obligation Bonds secured by the State’s SCRF to “A-1” following a general downgrade of any bonds backed by the State’s SCRF but then upgraded the University’s 1998 Special Obligation Bonds back to “Aa-3” on July 14, 2003.
January 2004: We were successful in confirming the credit ratings for the UCONN 2000 General Obligation Debt Service Commitment bonds at a time of State budget deficits and negative press reports. The unenhanced ratings for the UCONN 2000 GO DSC 2004 new money and refunding bond issues were as follows: Moody’s Investors Service “Aa3”, Standard & Poor’s “AA” and Fitch IBCA “AA-”. Several maturities also carried “AAA” rated MBIA bond insurance.
