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Credit Ratings
As of March 31, 2012, 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. It is a strong vote of confidence in the University that Moody’s and Standard & Poor’s ranks these bonds as high as the State’s General Obligation Bonds.
The UCONN 2000 Special Obligation Bonds were rated “AA-” by Standard & Poor’s and “Aa2” by Moody’s Investors Service. Fitch Investors Service does not have an underlying rating for the University’s Special Obligation bonds.
In addition to the underlying credit ratings, municipal bond insurance from FGIC, MBIA and FSA secure certain maturities of several of the above bond issues. Originally, the insurance provided “AAA” credit ratings. The bond insurers have experienced a series of downgrades in recent years. At times, this has resulted in the UCONN 2000 bonds underlying credit ratings exceeding the credit ratings for certain bond insurers. As a result, people are advised to check with the credit rating agencies for the most recent bond insurer ratings.
Credit Rating History
Since the inception of UCONN 2000, the University’s bonding program has experienced a favorable credit rating history, including several credit rating upgrades.
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.
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 “A1” 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 Student Fee Revenue 1998 Series A Bonds (SCRF) 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-” from Standard & Poor’s and an “A1” from 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 Student Fee Revenue 1998 Series 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 Series 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 UCONN 2000 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 a 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 “A1” 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 “Aa3” 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.
February 2005: The unenhanced ratings for the UCONN 2000 GO DSC 2005 new money bond issue were confirmed with Moody’s Investors Service “Aa3”, Standard & Poor’s “AA” and Fitch IBCA “AA-”. Several maturities also carried “AAA” rated FSA bond insurance.
February 2006: The unenhanced ratings for the UCONN 2000 GO DSC 2006 new money and refunding bond issues were confirmed as follows: Moody’s Investors Service “Aa3”, Standard & Poor’s “AA” and Fitch IBCA “AA-”. Several maturities also carried “AAA” rated FGIC bond insurance.
March 2007: The unenhanced ratings for the UCONN 2000 GO DSC 2007 new money and refunding bond issues were confirmed as follows: Moody’s Investors Service “Aa3”, Standard & Poor’s “AA” and Fitch IBCA “AA-”. The bonds were issued without bond insurance.
March 2009: The underlying ratings for the UCONN 2000 GO DSC 2009 new money bond issues that are in the process of being issued were confirmed as follows: Moody’s Investors Service “Aa3”, Standard & Poor’s “AA” and Fitch IBCA “AA-”.
November 2009: Fitch IBCA retained the “AA-“ for UCONN 2000 GO-DSC bonds but placed them on “negative outlook” and did the same for the UCONN 2000 SO-SFR 1998 SCRF bonds (no UConn underlying rating), mirroring the negative outlook they had put on the State of Connecticut’s General Obligation Bonds, during October 2009. Through diligent management and active communication UConn’s Treasury Services avoided a similar move by other credit rating agencies at this time.
March 2010: Standard & Poor’s affirmed the "AA-/Stable” unenhanced ratings for UConn’s Special Obligation Student Fee Revenue Bonds Series 2002-A bonds, and Special Obligation Student Fee Revenue Refunding Bonds Series 2002-A bonds.
April 2010: FITCH recalibrates UCONN 2000 General Obligation and Special Obligation Student Fee Revenue 1998A (SCRF) Bonds to “AA” rating outlook negative, and recalibrates State of Connecticut General Obligation to “AA+” rating outlook negative.
May 2010: Moody’s recalibrates UConn’s Special Obligation Student Fee Revenue Bonds unenhanced ratings to “Aa2” (upgrade from “Aa3”); and Standard & Poor’s affirms at "AA-/Stable”.
May 2010: Moody’s recalibrates the unenhanced ratings of UCONN 2000 General Obligation Debt Service Commitment Bonds to “Aa2” (upgrade from “Aa3”); and Standard & Poor’s affirms at "AA/Stable”; and FITCH affirms at “AA”.
June 2010: FITCH moves UCONN 2000 General Obligation and Special Obligation Student Fee Revenue 1998A (SCRF) Bonds back to “AA-” rating outlook stable, and moves State of Connecticut General Obligation back to “AA” rating outlook stable, citing State finances, a month after affirming UConn’s “AA” rating outlook negative.
June 2011: S&P affirmed underlying ratings of "AA-" Stable outlook on UCONN 2000 Special Obligation Student Fee Revenue Bonds, (includes 2010 Refunding; 2002 New Money; and 2002 Refunding).
June 2011: UCONN 2000 General Obligation Debt Service Commitment Bonds affirmed by Moody's Investors Service at "Aa2" but revised the outlook to negative (following their action on State of Connecticut's general obligation bond rating) and affirmed UCONN 2000 Special Obligation Student Fee Revenue Bonds at "Aa2” Stable outlook.
November 2011: For the UCONN 2000 General Obligation Debt Service Commitment Bonds Moody's Investors Service downgraded the rating to “Aa3” from “Aa2" and revised the outlook to positive (following their same action on State of Connecticut's general obligation bond rating); Standard & Poor’s affirmed the rating at "AA/Stable”; and FITCH affirmed the rating at “AA-/Stable”.
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