Press Release

August 7, 2006

Troy University bond rating affirmed by Moody's Investors Service

TROY – Moody’s Investment Services has given Troy University its vote of confidence in assigning an A3 rating to the University’s $23 million student housing complex venture.

Moody’s also affirmed its A2 ratings with positive outlook of the University’s general student fee revenue bonds.

The assignment will clear the way for the issuance of bonds that will cover the costs of constructing the complex that will add 524 beds to the on-campus accommodations. The rating is “the very best we could hope for,” according to Dr. Doug Patterson, senior vice chancellor for financial services.

“This rating indicates Moody’s continuing support in the financial management of the University,” he said.

The dormitory revenue bonds are expected to be sold during August for closing in September and will be insured by a Aaa-rated insurer.

In a report to investors, Moody’s based its decision on:

• Rapidly growing enrollment (57 percent over the past three years)
• Improving state support from the Aa2-rated Alabama (contributing 22 percent of total FY2005 revenue)
• A “strongly positive operating performance” with 9.9 percent average operating margin leading to 4.8 times combined coverage of debt service
• A moderate amount of comprehensive debt ($75.4 million) with limited future borrowing plans and
• Solid levels of unrestricted reserves ($65 million) covering outstanding debt and providing favorable operating flexibility

“The positive outlook is based on expectations on continued enrollment growth, favorable operating performance, state operational support, moderate future borrowing and financial resource growth,” the report stated. “Given our positive outlook a downward rating change remains unlikely without a significant decline in student market position and level of financial resources, or a substantial change in the University's debt strategy.”

In addition to the new student housing complex, the University Board of Trustees on Friday voted to authorize Chancellor Jack Hawkins Jr. to move forward on negotiations for $10 million in bonds for the construction of a new College of Education Building. That issue has not yet been rated. Recent bond issues have financed the construction of the General Academic Building and renovations to Clements Hall.

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