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 Post subject: UCA Finances and Bond Ratings
PostPosted: Thu Jun 05, 2014 10:53 pm 
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Joined: Mon Jul 25, 2011 8:32 pm
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As of June 4, 2014......

Hats off to Pres Courtway and his team for the continued financial improvement. Looks like work on Lewis Science Center getting ready to get started. Still need good enrollment growth.


https://www.moodys.com/research/Moodys-assigns-A2-to-University-of-Central-Arkansas-Ser-2014--PR_301025?WT.mc_id=NLTITLE_YYYYMMDD_PR_301025


Rating Action:
Moody's assigns A2 to University of Central Arkansas Ser. 2014 bonds; outlook stable




Global Credit Research - 04 Jun 2014






$150M of pro forma rated debt

New York, June 04, 2014 --

Moody's Rating



Issue: Student Fee Revenue Capital Improvement Bonds, Series 2014; Rating: A2; Sale Amount: $13,500,000; Expected Sale Date: 06-12-2014; Rating Description: Revenue: Public University Broad Pledge



Opinion



Moody's Investors Service has assigned an A2 rating to University of Central (UCA) Arkansas Student Fee Revenue Capital Improvement (Lewis Science Center Project) Series 2014. The outlook is stable. We have also affirmed the A2 ratings on UCA's rated debt.



SUMMARY RATING RATIONALE



The A2 rating and stable outlook reflect UCA's move to consistently strong operating performance, healthy state support, and ongoing progress in building flexible reserves. The rating and outlook also incorporate fluctuating enrollment and expectations of increasing competition for students. Other challenges include a modest balance sheet cushion relative to peers, increasing operating leverage and history of turnover among senior management.



STRENGTHS



*UCA enjoys a sound market position as a regional public university with fall 2013 full-time equivalent (FTE) enrollment of 9,857 students, up from 9,544 FTEs in fall 2012.



*Prudent fiscal management has resulted in a sustained move to healthy operating performance. The university's fiscal year (FY) 2012 cash flow margin of 15.0% provided strong debt service coverage of 3.0 times. Preliminary FY 2013 results demonstrate continued favorable operations.



*Strong financial management has contributed to the recovery of liquid cash balances in support of debt and operations, with monthly liquidity growing to $35.1 million in FY 2012 from just $4.9 million in FY 2009 and expectations of additional growth in coming years.



*The university has experienced continued state support with modestly increasing annual appropriations. State support also includes annual lottery scholarship support for tuition through student grants of up to $4,500 per student annually.



CHALLENGES



*History of weak controls and governance led to turnover of the president and board members that resulted in negative media coverage during the past several years.



*Operating leverage is elevated with pro forma debt to operating revenue of 1.03 times, and could increase as the university may issue additional debt.



*Financial resources are relatively thin with limited expected growth as UCA reinvests in campus infrastructure. Expendable financial resources provide a modest 0.25 times coverage of pro forma debt and 0.28 times coverage of operations in FY 2012.



*Enrollment and student demand has fluctuated in recent years, and increasing competition will likely necessitate enhanced marketing to maintain or grow market share.



*Delayed audited financial statements from the Arkansas Division of Legislative Audit reduce timely transparency. The audit opinion for the year ending June 30, 2012 was not executed until August 27, 2013, nearly 14 months after the close of the fiscal year.



OUTLOOK



The stable outlook is based on Moody's expectation that the university will maintain strong operations and at least stable cash reserves. It is also predicated on stable student enrollment, healthy coverage of debt service by pledged revenues and the ability to increase net student revenue over time.



WHAT COULD MAKE THE RATING GO UP



Growth of operating revenue and financial resources with limited additional borrowing coupled with stabilized student demand could result in an upgrade.



WHAT COULD MAKE THE RATING GO DOWN



If the university were to experience a decline in its liquid cash position and deterioration of the balance sheet, or prolonged pressure on student market or operating performance there could be negative rating pressure.



METHODOLOGY



The principal methodology used in this rating was U.S. Not-for-Profit Private and Public Higher Education published in August 2011. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.



REGULATORY DISCLOSURES



For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.



Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.


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 Post subject: Re: UCA Finances and Bond Ratings
PostPosted: Fri Jun 06, 2014 2:27 am 
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Joined: Wed Jun 20, 2012 3:29 pm
Posts: 12
We are making progress, during 2010-2011, Moody upgrade UCA rating three times. The first time in Arkansas history that a University has been upgrade three times in 18 months.


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