MOODY'S ASSIGNS Aa2 RATING TO OKLAHOMA'S $131.4 MILLION STATE REGENTS FOR HIGHER EDUCATION ENDOWED CHAIRS FUNDING PROGRAM BONDS, ISSUED THROUGH THE OKLAHOMA CAPITOL IMPROVEMENT AUTHORITY

Posted on: June 25, 2010, 4:48 pm

NEW YORK, Jun 25, 2010 -- Moody's Investors Service has assigned a Aa2 rating to the Oklahoma Capitol Improvement Authority's $131.4 million of Endowed Chairs Funding and Refunding Program Bonds, Federally Taxable Series 2010, which are to be issued on behalf of the Oklahoma State Regents for Higher Education. Bond proceeds will provide $100 million of new money for the program, and will restructure $28.7 million of outstanding Series 2006 bonds for budgetary relief over the next five years (net present value savings estimated to be -9.3% of refunded par). Proceeds will be placed in an endowment to generate investment earnings used to match private contributions to qualified higher education institutions within the Oklahoma State System. The rating is based on the state's subject-to-appropriation credit rating (Aa3), which is strengthened by statutory and contractual provisions that the principal amount of the proceeds is available to repay the bonds in the event state appropriations are insufficient. At this time, Moody's has also affirmed the Aa2 rating on the state of Oklahoma's general obligation (G.O.) bonds, the Aa3 ratings on the various outstanding Oklahoma Capitol Improvement Authority Lease Revenue Bonds, the A1 ratings on the Master Equipment Lease Program and Master Real Property Lease Program bonds issued by the Oklahoma Development Finance Authority, and the A1 rating on Oklahoma Development Finance Authority Series 2002 Lease Revenue Bonds (Oklahoma Council on Law Enforcement Education and Training Project). The state's rating outlook is stable. Oklahoma's Aa2 G.O. rating is based on conservative fiscal practices, low debt ratios, and a trend of healthy fund balances, offset by a sizeable unfunded pension liability and a 1992 constitutional amendment that prohibits tax increases without approval in a popular vote or by a three-quarters majority in the legislature. The rating also reflects the volatility inherent in the natural gas and oil sectors, while recognizing the importance of the public sector military and defense contribution...

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