KBRA Assigns the University of North Texas System RFS Bonds AA Rating, Stable Outlook
17 Apr 2025 | New York
KBRA assigns a AA, Stable Outlook to University of North Texas System Board of Regents Revenue Financing System ("RFS") Refunding and Improvement Bonds Series 2025A and RFS Taxable Refunding and Improvement Bonds Series 2025B. Concurrently, KBRA assigns a AA, Stable Outlook to outstanding parity RFS Bonds previously issue by the Board on the System's behalf. RFS Obligations issued under the Master Resolution, including the Series 2025A and Taxable Series 2025B Bonds, are payable from and solely secured by Pledged Revenues of the RFS System. Pledged Revenues consist of Revenue Funds, including all unencumbered funds and balances legally available to the Board.
Key Credit Considerations
The rating was assigned because of the following key credit considerations:
Credit Positives
- Solid finances, with sufficient liquidity, diverse funding sources and balanced financial operations.
- Healthy student demand, with a growing out-of-state component.
Credit Challenges
- On-going plans for debt issuance driven by required capital needs that could leverage the balance sheet.
Rating Sensitivities
For Upgrade
- Strengthened financial performance and liquidity, providing enhanced financial flexibility.
For Downgrade
- While not expected, a significant increase in leverage which weakens the RFS security pledge and structure.
- Continued freeze of undergraduate tuition, coupled with a significant decline in State funding that strains operations.
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