Oklahoma State University's Approximately $250 Million Revenue Bonds Assigned 'AA-' Rating On Strong Finances

CENTENNIAL (S&P Global Ratings) March 27, 2020--S&P Global Ratings assigned its 'AA-' long-term rating to the Oklahoma A&M Colleges Board of Regents' approximately $116.58 million series 2020A (tax-exempt), $24.895 million series 2020B (tax-exempt), and $109.255 million series 2020C (taxable) general revenue and refunding bonds, issued on behalf of Oklahoma State University (OSU). At the same time, we affirmed our 'AA-' long-term rating and underlying rating (SPUR) on OSU's various outstanding bonds. The outlook on all ratings is stable.
"The rating reflects our view of OSU's very strong enterprise profile, supported by its position as a co-flagship and land grant university in Oklahoma, with moderate selectivity, and its solid fundraising and research presence," said S&P Global Ratings credit analyst Amber Schafer. "We consider OSU's financial profile as strong, with a history of generally positive operating results, a relatively manageable debt load, and good financial management as demonstrated by the university's ability to manage through significant state appropriation cuts," Ms. Schafer added.
We do believe there is a high level of uncertainty regarding the duration and extent of the impact of the COVID-19 outbreak, and recognize that the situation is fluid. Due to the recent COVID-19 pandemic, the university is currently transitioning classes online. If the duration of the COVID-19 pandemic continues beyond the immediate near term, and the longer the student body remains off campus, this could influence fiscal 2021 results. Though we think the university has taken proactive steps to address COVID-19, we understand the virus to be a global risk, and we could consider a negative rating action during the outlook period should pressures related to the pandemic materially affect state funding, enrollment, demand, or finances.
The series 2020A tax-exempt bonds will be used to current refund a portion of the university's series 2010A and 2010C bonds for debt service savings. The series 2020B tax-exempt bonds will be used to make certain capital improvements on the Stillwater campus. The series 2020C taxable bonds will be used toward certain capital projects on the Stillwater campus, advance refund a portion of the series 2013B and series 2013C bonds, and pay the purchase price under certain lease purchase agreements with ODFA to acquire certain existing academic and related facilities on the Stillwater campus. Bond proceeds will also pay for the costs of issuance. We understand maturities on the refunded debt will not be extended.
SU, founded in 1890 as the Oklahoma Agricultural and Mechanical College, is a land-grant institution for the state of Oklahoma. The university has eight major divisions: the colleges of agricultural science and natural resources; arts and sciences; business administration; education, health and aviation; engineering, architecture, and technology; human sciences; veterinary medicine; and the graduate college.
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