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Fitch Rates UConn $100M Bonds ‘AA-’
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Business New Haven
4/15/2002
By: BNH
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NEW YORK, N.Y. - Fitch has rated 'AA-' the University of Connecticut's $100 million general obligation bonds 2002 series A, the week of April 8 through negotiation with a syndicate led by Advest Inc. The bonds will be due $5 million on April 1, 2003-22, with call features yet to be determined. Fitch also affirms the 'AA-' rating on $515.6 million outstanding UConn general obligation bonds.
While UConn is the issuer of the bonds, which will be its general obligations, the security rests with the state of Connecticut. Under the legislation creating the ten-year improvement program in 1995, the state made a debt service commitment equal to principal and interest on a total of $962 million bonds intended to be issued over the period. This is the seventh series. The debt service commitment is from the state's general fund, and is appropriated and obligated to be paid by the state treasurer without requiring further legislative approval. The bonds will not be general obligations of the state and its faith and credit are not pledged. The bonds will, however, be included in direct state debt for purposes of computation of the statutory debt limit.
The state's own general obligation bonds, secured by its full faith and credit, are rated 'AA' by Fitch Ratings. General fund obligations, with the strength of continuing appropriations, are seen as slightly less well secured. The UConn 2000 bonds fall within this category, notwithstanding the fact that higher education is constitutionally a state responsibility.
Connecticut's fundamental wealth and economic resources underlie its high credit quality although debt is and will continue to be high. The state continues to lead the nation in per-capita income, with the 2000 figure of $40,870 equal to 139 percent of the national average. After this sale, net tax-supported debt will approximate $11 billion, equal to $3,230 per capita and 7.9 percent of personal income.
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