19.11.2012 17:07
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Oregon Facilities Authority -- Moody's affirms Baa1 rating on Linfield College's outstanding revenue bonds; outlook remains stable

College has $42.2 million of rated debt outstanding

New York, November 19, 2012 -- Moody's Investors Service has affirmed the Baa1 rating on Linfield College's (OR) 2005 Series A and 2010 Series A Revenue Bonds issued through the Oregon Facilities Authority. The rating outlook remains stable.

SUMMARY RATING RATIONALE

The Baa1 rating is based on Linfield College's established market position with challenges for undergraduate enrollment from a highly competitive student market, though balanced by a diversity of program offerings across three divisions; positive operations with growing net tuition revenue; and an adequate financial resource cushion relative to debt and operations, with fixed rate debt and no near term borrowing plans.

STRENGTHS

*Historically solid operating performance evidenced by an average operating surplus of 4.9% over the past three fiscal years (FY) 2010 to 2012; healthy operating cash flow of 13.4% provided good debt service coverage of 3.0 times for FY 2012.

*Established undergraduate market position for this primarily regional liberal arts college in Oregon with full-time equivalent (FTE) enrollment of 2,253 in fall 2012; diversity of program offerings as the college operates three distinct divisions across several locations around the state.

*Adequate balance sheet cushion with expendable financial resources of $58.4 million in FY 2012, up 44% over FY 2010 ($40.4 million), providing a cushion of 1.38 times debt and 0.93 times annual operations.

*No additional borrowing plans beyond the current offering in the near term, with all debt fixed rate.

CHALLENGES

*Competitive student market environment with a number of private and public institutions in the Pacific Northwest, evidenced by weakening selectivity and matriculation measures and variable enrollment over the past several years.

*High reliance on student charges (84.5% of operating revenue as calculated by Moody's) underscoring the need to maintain growth in net tuition revenue as well as a solid market position.

*Manager concentration within the endowment presents some business risk in the event of fund failure; as of September 30, 2012, the college had three funds representing 18.4%, 14.6%, and 13.6% of the portfolio.

Outlook

The stable outlook reflects our expectation that the college will work toward stabilization of its traditional undergraduate market position, maintain strong enrollment at the Portland campus and DCE divisions, continue to produce healthy operating performance, and build balance sheet reserves through favorable operating performance and fundraising, with no near-term borrowing plans.

WHAT COULD MAKE THE RATING GO UP

Sustained strengthening of student market demand reflected in growing net tuition revenue and improved matriculation rates; growth of financial resources to cushion debt and operations

WHAT COULD MAKE THE RATING GO DOWN

Weakening of net tuition revenue and operating margins; deterioration of the financial resource base cushioning debt and operations; additional debt without commensurate growth in resources

PRINCIPAL RATING METHODOLOGY

The principal methodology used in this rating was U.S. Not-for-Profit Private and Public Higher Education published in August 2011. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare the rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Analytics information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Mary Kay CooneyAsst Vice President - Analyst Public Finance Group250 Greenwich StreetNew York, NY 10007 U.S.A. Eva Bogaty Asst Vice President - Analyst Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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