OREANDA-NEWS. Fitch Ratings has affirmed the Short-term 'F1+' rating on \$57 million of Missouri Development Finance Board cultural facilities variable-rate demand bonds (VRDBs) series 2004A issued on behalf of the Nelson Gallery Foundation (NGF). Fitch has also affirmed the 'F1+' rating on the implied short-term obligations of the Hall Family Foundation (HFF, or the foundation).

The short-term rating on NGF's series 2004A VRDBs is based on an irrevocable donation agreement between HFF and NGF, and supported by the internal liquidity of HFF. There is also supplemental liquidity support provided by a standby bond purchase agreement (SBPA) from The Northern Trust Company (rated 'AA-/F1+' by Fitch Ratings).

SECURITY

The bonds are an unsecured general obligation of NGF. Payment of principal and interest on the bonds when due will be paid under the HFF donation agreement.

KEY RATING DRIVERS

FINANCIAL STRENGTH OF HFF: The foundation's financial profile is characterized by substantial balance sheet resources and lack of any financial obligations beyond the debt service guaranty on NGF's series 2004A VRDBs. Fitch maintains an implied general obligation rating on HFF of 'AAA' and a Long-term rating of 'AAA' on the series 2004A bonds.

SUFFICIENT LIQUID RESOURCES: HFF has the ability to cover the maximum potential liquidity demands presented by NGF's series 2004A VRDBs by 2x from internal resources. Such resources include cash and highly liquid, highly rated investments.

RATING SENSITIVITIES

FINANCIAL DETERIORATION: Erosion to the Hall Family Foundation's (HFF) internal resources to the point where it could no longer sufficiently fund any un-remarketed puts on the Nelson Gallery Foundation's \$57 million of series 2004A variable-rate demand bonds, while unlikely, would put downward pressure on the short-term ratings of both HFF and the series 2004A bonds.

CREDIT PROFILE

NGF is a 501(c)(3) organization created in 1954 by the Trustees of the William Rockhill Nelson Trust for the purpose of acquiring works of art for exhibition to the public and to own and operate the Nelson-Atkins Museum (originally founded in 1933), which is located in Kansas City, Missouri. The museum contains more than 33,500 works of art, and annual attendance totals more than 400,000.

Established in 1953, HFF is a private philanthropic 501(c)(3) organization with a mission to support the community needs of the greater Kansas City area. Its philanthropic efforts center on five key areas: children, youth and families; education; the arts; community development; and additional interests. In 2004, HFF entered into a donation agreement with NGF, whereby the foundation is responsible for the debt service on NGF's series 2004A VRDBs via periodic charitable donations.

HFF's LIQUID RESOURCES SUPPORT SHORT-TERM DEBT GUARANTY

HFF maintains a substantial level of balance sheet resources. As of March 31, 2015, the foundation's investment portfolio had a market value of approximately \$898.7 million (unaudited). The portfolio's most liquid holdings, including cash, cash equivalents, U.S. government obligations, and investment grade corporate debt, totaled about \$114 million (after discounts based on asset type and maturity per Fitch's short-term rating criteria), providing solid 2.0x coverage of NGF's \$57 million of series 2004A VRDBs. For an 'F1+' rating, Fitch typically expects coverage of at least 1.25x. The Northern Trust Company SBPA that provides supplemental liquidity support expires in June 2016.

HFF has no liabilities and the NGF donation agreement is the only debt for which it has any direct or indirect obligation for payment.