OREANDA-NEWS. Fitch Ratings has affirmed its 'F1+' rating on the following debt issued by the Rector and Visitors of the University of Virginia (UVA):

--\$78.6 million of outstanding series 2003A multi-modal general revenue pledge bonds;
--\$300 million taxable and tax-exempt commercial paper (CP) program.

SECURITY

The revenue bonds and CP are unsecured general obligations of UVA, payable from all legally available funds.

KEY RATING DRIVERS

FINANCIAL STRENGTH OF UVA: The university maintains a strong financial profile fueled by a diverse revenue base; substantial balance sheet resources; robust fundraising; and manageable debt burden. Fitch maintains a long-term 'AAA' rating on UVA's general revenue pledge bonds.

SUFFICIENT LIQUID RESOURCES: UVA has the ability to cover the maximum potential liquidity demands presented by its variable rate debt programs by over 3x from internal resources. Such resources include cash; highly liquid, highly rated investments; and dedicated liquidity facilities.

RATING SENSITIVITIES

FINANCIAL DETERIORATION: Erosion to UVA's internal liquid resource base or to its general credit profile to the point where the university could no longer sufficiently cover its variable-rate obligations, while highly unlikely, would put downward pressure on the rating.

CREDIT PROFILE

Chartered in 1819, UVA is a highly selective, comprehensive public university located in Charlottesville, Virginia. The university's fall 2014 undergraduate acceptance rate was 29%, with a solid 41% of accepted students choosing to enroll. UVA's prestigious graduate programs, including the Darden School of Business and the School of Law maintain equal or higher admissions selectivity. Fall 2014 full-time equivalent enrolment totaled 21,762 students, up just less than 2% from the prior year.

UVA's strong financial profile is characterized by consistently positive operations that are funded by a diverse operating budget; substantial balance sheet resources, with exceptional management of the long-term investment pool provided by University of Virginia Investment Management Company; impressive philanthropic activities, including a recently concluded \$3 billion fundraising campaign; and a manageable debt burden. UVA also benefits from the strong competitive and financial position of the University of Virginia Medical Center, a fully integrated division of the university which provides nearly half of total operating revenues.

LIQUID RESOURCES SUPPORT SHORT-TERM DEBT

The 'F1+' rating is based on the availability of highly liquid, highly rated securities to cover potential maximum liquidity demands presented by UVA's outstanding multi-modal general revenue pledge bonds and CP notes. To supplement internal liquidity sources, UVA maintains the ability to draw on three dedicated lines of credit in the aggregate amount of \$200 million. Of the university's substantial cash and investments, approximately \$1.24 billion, including cash and cash equivalents, and U.S. government and agencies securities (after discounts based on maturity per Fitch's short-term rating criteria) was available on Dec. 31, 2014.

On a combined basis, UVA's liquid assets totaled \$1.44 billion and covered its liquidity needs of \$378.6 million by a healthy 3.8x. This includes \$78.6 million of outstanding multi-modal revenue bonds and its maximum CP authorization of \$300 million (\$250 million currently outstanding). For an 'F1+' rating, Fitch typically expects coverage of at least 1.25x. To limit potential demands on its liquidity, UVA limits the amount of CP notes that can come due on a given day to \$40 million. The university's detailed procedures for handling a failed remarketing of multi-modal bonds and/or rollover of CP are regularly reviewed, reflecting favorably on management.

UVA plans to propose a \$330 million financing to its board of visitors for authorization in mid-February to refinance various series of general revenue pledge bonds and outstanding CP notes. Fitch will perform a full credit review of the university closer to the proposed sale date.