Fitch Rates Rutgers State University, NJ GO CP Notes 'F1+'
OREANDA-NEWS. Fitch Ratings has assigned a rating of 'F1+' to Rutgers State University (NJ) general obligation commercial paper series A (tax-exempt); series B (tax-exempt); series C (federally taxable) and series D (extendable tax-exempt) (the notes).
KEY RATING DRIVERS
The 'F1+' rating is based on the liquidity support provided by Wells Fargo Bank, National Association(Wells; rated 'AA/F1+', Stable Outlook) in the form of a Standby Commercial Paper Purchase Agreement (SCPPA) which has a stated expiration date of April 10, 2018 unless extended or earlier terminated and Rutgers University. The Wells SCPPA provides coverage for the principal amount of the notes due on the maturity dates of the notes. Rutgers University remains obligated to pay interest upon maturity of all notes. Fitch currently rates general obligations of Rutgers State University 'AA-', Stable Outlook (see rating action commentary dated July 29, 2015, available at 'www.fitchratings.com').
U.S. Bank National Association as the Issuing and Paying Agent (IPA) for the notes will draw on the SCPPA whenever proceeds of the sale of rollover notes and University revenues are insufficient to pay maturing notes. The SCPPA provides sufficient coverage for the $200,000,000 principal amount of notes.
The notes were issued at par, with interest due at maturity. Following the occurrence of an event of default under the SCPPA, Wells may direct the IPA to immediately stop the issuance of any additional notes (a no-issuance instruction). Following the no-issuance instruction the bank may reduce the stated amount of the SCPPA to the amount of notes outstanding. The IPA may submit a request for purchase to pre-fund the purchase of commercial paper notes outstanding. In addition, the SCPPA may be terminated at Wells Fargo's option upon the occurrence of specified termination events. The dealers for the notes are Morgan Stanley and Bank of America Merrill Lynch.
The 'F1+' rating reflects the short-term rating that Fitch maintains on the bank providing liquidity support and will be adjusted upward or downward in conjunction with changes to the short-term rating of the bank and in some cases, the long-term rating of Rutgers University.