Stephen F. Austin State University

NEW YORK--(BUSINESS WIRE)--Fitch rates approximately $20,175,000 of Texas Public Finance Authority Revenue Financing System (RFS) Revenue Bonds, series 2008, issued on behalf of Stephen F. Austin State University (SFA) 'A+'. The bonds are scheduled to sell competitively on or about Feb. 7. At the same time, Fitch affirms the unenhanced, long-term 'A+' rating on approximately $120.2 million of SFA's outstanding parity RFS bonds. RFS bonds are secured by and payable from a pledge of all legally available revenues and fund balances. The pledge excludes state appropriations and other restricted funds of SFA. The Rating Outlook is revised from Negative to Stable.

The Outlook Revision from Negative to Stable reflects SFA's proven ability in managing the operational and financial risks associated with the implementation of a comprehensive, multi-year capital improvement program. Despite several years of extensive on-campus construction and a significant increase in outstanding leverage to fund various projects, SFA has experienced generally stable enrollment trends, increased revenues from which RFS debt is serviced, and bolstered available liquidity. Although SFA expects to incur approximately $51.2 million in additional debt to address outstanding deferred maintenance needs and to construct academic facilities, including the Education Research Center (funded by the 2008 bonds), increased principal and interest requirements are expected to be offset by increased legislative appropriations made available to SFA under the Tuition Revenue Bond and Higher Education Fund financing programs. In the event available state funding is reduced, Fitch assumes the timing and/or scope of certain projects would be changed. While SFA's student headcount is subject to some variability over time, it is expected that overall trends will continue to be stable, yielding financial metrics commensurate with the rating category.

The 'A+' rating is primarily anchored by SFA's healthy liquidity; track record of generally balanced to positive operating performance; and experienced, proactive management team which has made significant investment in both facilities and programs to position SFA in a highly competitive marketplace. Primary credit concerns include a high pro-forma debt burden relative to other similarly rated public universities; a price sensitive market which may limit SFA's ability to materially increase tuition and fees in times of state funding reductions; and the potential that higher operating costs associated with an expanded campus could pressure operating margins and available liquidity.

SFA, located in Nacogdoches, Texas, was established in 1923 as a college for teacher training. Today, it has six colleges -- Business, Education, Fine Arts, Forestry and Agriculture, Liberal and Applied Arts, and Science and Mathematics -- offering 83 baccalaureate degrees in over 120 subject areas, masters degrees in 46 areas, and, doctoral degrees in Forestry and Education. Approximately 98% of SFA's students are Texas residents. Proceeds of the series 2008 bonds will be applied by SFA to fund construction of an education research facility and to pay various costs of issuance.

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