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Agencies assign strong ratings to CCU bond issue

January 25, 2013

Two major credit rating agencies have assigned strong ratings to a $50.9 million revenue bond series issued by Coastal Carolina University. Moody's Investor Service has assigned an "A1" rating to the bond issue, and Fitch Ratings has assigned an "A+" rating.

The A+ rating by Fitch reflects CCU's "stable credit attributes," according to the company's credit report. The report cites the university's "consistently positive operating results, stable and growing enrollment trends and adequate balance sheet liquidity."

The bonds, expected to sell the week of Feb. 4, will be used to finance the construction of the first phase of a new student residence facility scheduled to be completed in 2015, as well as to fund capitalized interest and pay costs of issuance.

The Fitch report notes that, although CCU has an increasing debt burden, the university has the capacity to successfully manage the debt as a result of its strong revenue mix from in-state and out-of-state tuition.

In addition to its A1 rating on the new revenue bond issue, Moody's has also affirmed a stable rating in reference to all the university's outstanding debt.

The Moody's report cites CCU's "stable market position as a regional public university with strong out-of-state draw, county tax support, healthy operating cash flow margins leading to good debt service coverage and growing financial resources that provide satisfactory coverage of pro-forma debt." The rating also reflects CCU's "high dependence on tuition revenue, very low state support, and elevated operating leverage."

"I'm very gratified that these premier bond rating agencies recognize that Coastal Carolina University is a financially stable institution that manages its assets well," said CCU President David A. DeCenzo. "I will continue to move the management of CCU toward a business model that is able to adapt and stay current with the changes and trends in the dynamic world of American higher education."

Moody's list of CCU's "Strengths" includes a recognition of the institution's location near Myrtle Beach, its growing enrollment, and its local support from Horry County in the form of tax millage and the penny tax approved in 2008 for capital projects.