OREANDA-NEWS. S&P Global Ratings revised its outlook to positive from stable on The Health & Educational Facilities Board of the Metro Government of Nashville & Davidson County, Tenn.'s $214.4 million revenue bonds issued for Vanderbilt University. At the same time, we affirmed our 'AA' ratings on the debt and our 'A-1+' short-term rating on Vanderbilt's commercial paper (CP) programs. All debt is an unsecured general obligation of the university.

"The outlook revision to positive is based on Vanderbilt's separation of its operations from Vanderbilt University Medical Center (VUMC), a newly formed 501(c)(3)," said S&P Global Ratings credit analyst Laura Kuffler-Macdonald. "The positive outlook is based on the significant reduction in debt, combined with the retention of the majority of the endowment, which could position the university for a higher rating." However, at the same time, the operating base is significantly smaller. The outlook also is based on an assumed improvement in expendable resources to debt and operations given the transaction.

"We could raise the rating over the outlook period assuming Vanderbilt successfully transitions its operations and cash flow away from its health care enterprise while maintaining its current margins," added Ms. Kuffler-Macdonald. An upgrade would also be based on improved expendable resources to debt and operations consistent with higher rated institutions given the VUMC transaction. We believe that this separation could result in improved resources commensurate for a higher rating over the two-year outlook period.

We could revise the outlook to stable should Vanderbilt experience difficulty in transitioning to operations, resulting in reduced margins, or should financial resources not increase to levels consistent with a higher rating.