OREANDA-NEWS. Fitch Ratings has affirmed its 'F1+' rating on the $150 million revenue financing system (RFS) taxable and tax-exempt commercial paper (CP) program issued by Texas Tech University Board of Regents (TTUS or the system).

SECURITY

TTUS's RFS revenue debt, including the CP notes, is secured by all legally available funds of the system. State operating appropriations and state HEAF capital appropriations are specifically excluded from the pledge.

KEY RATING DRIVERS

FINANCIAL STRENGTH OF TTUS: Texas Tech University System maintains a strong financial profile, which is supported by solid student demand; a diverse revenue base; substantial balance sheet resources; and a manageable debt burden, and positive GAAP operations. Fitch maintains a long-term 'AA+' rating on TTUS's RFS bonds.

SUFFICIENT LIQUID RESOURCES: The 'F1+' rating reflects the adequacy of TTUS's internal liquidity resources to meet note roll-overs under its CP program. Such resources include cash and highly liquid, highly rated investments, and exceed Fitch's 1.25x requirement for an 'F1+' rating.

RATING SENSITIVITIES

FINANCIAL DETERIORATION: Erosion to Texas Tech University System's internal resource base or to TTUS's general credit profile, to the point where the system could no longer sufficiently cover its variable-rate obligations, while unlikely, would put downward pressure on the rating.

CREDIT PROFILE

Texas Tech University was originally established in 1923, and in 1999 became TTUS when the Texas Tech University and Texas Tech University Health Sciences Center were combined. In 2007, Angelo State University, a former member of the Texas State University system, became a third member of the system. Effective in fiscal 2015, a fourth system component, the Health Sciences Center - El Paso, was created. Professional degrees include architecture, business, engineering, law, medicine, nursing and various health science programs.

System headcount is about 47,000 for the four academic units. Enrollment has been trending upward, and the university reports another record fall 2015 freshman class. The largest campus is the flagship TTU-Lubbock, with headcount of more than 35,000, almost 80% of system enrollment. Most students attend full-time, and most live on or near a system campus.

For more information on TTUS, see 'Fitch Rates Texas Tech University board of Regents System Revs 'AA+'' Outlook Stable, dated March 6, 2015'.

INTERNAL LIQUIDITY SUPPORTS SHORT-TERM DEBT
The 'F1+' rating is supported by TTUS's long-term credit quality, as well as the availability of highly liquid, highly rated securities to cover the liquidity demands of TTUS's RFS CP program. The CP program has a maximum authorization of $150 million. At Dec. 31, 2015, the system's liquid assets exceeded $641 million (as adjusted per Fitch's criteria), providing sufficient coverage of the maximum authorized CP amount. Fitch views this level as healthy, and consistent with expectations of at least 1.25x coverage to achieve the highest short-term rating.

The system uses the CP program as interim funding for capital projects. Currently, about $21 million of CP is outstanding; the system may issue an additional $50 million of CP during calendar 2015. Management reports no plans to change the authorized CP amount; the program is TTUS only self-liquidity exposure.