College achieves savings of $3.3 million on current refinancing and in excess of $5 million in debt savings since 2012
INDIANAPOLIS— Standard & Poor’s Rating Services has assigned an AA long-term rating to the Trustees of Ivy Tech Community College’s series T student fee bonds and affirmed its AA long-term and underlying ratings on Ivy Tech’s outstanding bonds with a stable outlook for all bonds. Standard and Poor’s upgraded Ivy Tech’s rating in January from AA- to AA for long-term and underlying ratings.
Fitch Ratings assigned an AA rating with a stable outlook on approximately $28.1 million of the Trustees of Ivy Tech Community College Student Fee Bonds, Series T. In addition, Fitch affirms the AA rating on approximately $263.4 million of outstanding Student Fee Revenue Bonds.
The Series T bonds sold via a negotiated sale last week through JP Morgan Securities. The proceeds will refund a portion of series K Student Fee Bonds that originally funded campus projects in Madison, Marion and Valparaiso and pay associated costs of issuance.
“Through sound financial management practices, we have been able to deliver savings to the taxpayers of the state through this refinancing of more than $3.3 million or 11 percent of the refunded debt,” said Chris Ruhl, Senior Vice President, Chief Financial Officer and General Counsel for Ivy Tech. “This deal was marked by strong investor demand for College bonds with orders exceeding supply by $50 million.”
The Series T refinancing increases the amount of cumulative savings through debt refunding by the College since 2012 to over $5 million.
“The rating reflects our view of Ivy Tech’s fundamental credit strengths including its strong operating income trends, highlighted by healthy surpluses recorded consistently for the past several years, growing financial resource rations, and robust state appropriations,” said Standard and Poor’s credit analyst Shivani Singh. “It also reflects Ivy Tech’s enterprise profile strengths, including its position as the largest single accreditation community college system in the U.S. and strong management team with good fiscal planning and policy in place.”
The AA rating from Fitch reflects Ivy Tech’s sound market position, increased state appropriations budgeted through Fiscal 2017, and healthy financial profile overall. Counterbalancing factors include exposure to fluctuations in federal funding for Pell grants and a moderate debt burden.
Standard and Poor’s noted that Ivy Tech has continued solid state support from Indiana representing 36 percent of Ivy Tech’s fiscal 2014 adjusting operating revenues; strong financial performance with consistent operating surpluses on a full accrual basis with proven expense flexibility to manage enrollment fluctuations; good fundraising history with good progress toward a $500 million campaign underway; adequate financial resources for the rating category with adjusted unrestricted net assets equal to 52.6 percent of adjusted operating expenses at 94.9 percent pro-forma debt as of June 30, 2014; and support of debt services on about 88 percent of total debt from state fee-replacement appropriations.
Fitch noted that Ivy Tech’s operating margin has been solidly positive over the past five years, reflecting steadily growing levels of state appropriations and prudent financial management in the midst of downward enrollment trends. Annual operating surpluses have contributed to significant gains in the college’s unencumbered financial resources, which provide for satisfactory coverage of long-term debt and softer, though still adequate, coverage of operating expenses.
Ivy Tech’s steady operating performance was also noted by Fitch with the college consistently generating positive operation margins, averaging 6.9 percent between fiscal years 2010 and 2014, including 5.8 percent in the most recent year. Fiscal year 2014 resulted in an operating surplus despite a year-over-year decline in total full-time equivalent (FTE) enrollment.
Ivy Tech Community College is the state’s largest public postsecondary institution and the nation’s largest singly accredited statewide community college system serving nearly 200,000 students annually. Ivy Tech has campuses throughout Indiana. It serves as the state’s engine of workforce development, offering affordable degree programs and training that are aligned with the needs of its community along with courses and programs that transfer to other colleges and universities in Indiana. It is accredited by the Higher Learning Commission and a member of the North Central Association.