CHICAGO--(BUSINESS WIRE)--Fitch Ratings has placed the 'A-' rating on the following outstanding bonds of University of Medicine and Dentistry of New Jersey (UMDNJ) on Rating Watch Evolving:
--$258 million New Jersey Educational Facilities Authority revenue refunding bonds, UMDNJ issue, series 2009 B; and
--$193 million UMDNJ bonds, 2002 series A.
SECURITY
The bonds are a general obligation (GO) of UMDNJ, payable from all legally available, unencumbered funds and balances. The bonds are also secured by state appropriations on deposit with a lockbox bank, pursuant to a lockbox agreement, acknowledged by the state of New Jersey (GO bonds rated 'AA-' with a Stable Outlook by Fitch).
KEY RATING DRIVER
UMDNJ Dissolution Effective July 1, 2013: The Rating Watch Evolving anticipates the July 1, 2013 dissolution of UMDNJ pursuant to legislation signed by New Jersey's Governor in August 2012. The legislation integrates UMDNJ's programs and facilities into Rutgers University (rated 'AA-'/Stable Outlook); Rowan University (NR) and a free-standing hospital entity (NR). Fitch's rating for Rutgers incorporates their portion of the UMDNJ integration.
RATING SENSITIVITY
The outstanding debt of UMDNJ is expected to be defeased in late June 2013, with each of the three receiver entities issuing refinancing/defeasance bonds as they assume their proportionate shares of UMDNJ's debt. Fitch expects to withdraw its ratings on the above UMDNJ bonds effective July 1, 2013.
CREDIT PROFILE
New Jersey Medical and Health Sciences Education Restructuring Act (the Act)
The Act integrates all schools and programs of UMDNJ into three organizations: Rutgers University, Rowan University, and a free-standing hospital with its own board of directors. The hospital will remain as Rutgers main teaching hospital, but will have no financial affiliation.
UMDNJ Institutional Profile
Prior to the July 1, 2013 dissolution of UMDNJ and integration of its schools and programs pursuant to the Act, UMDNJ is the state's health sciences university. UMDNJ has a network of five academic health center campuses, and partners with more than 200 education and healthcare partners. UMDNJ operates the state's only three medical schools (New Jersey Medical School, Robert Wood Johnson Medical School and the School of Osteopathic Medicine); a dental school; an academic medical center and safety net hospital (UH); a cancer institute; schools of public health, biomedical sciences, health related professions and nursing; and faculty practice plans.
Additional information is available at 'www.fitchratings.com'
Applicable Criteria and Related Research:
--'Revenue-Supported Rating Criteria', dated June 3, 2013.
--'U.S. College and University Rating Criteria', dated May 10, 2013, 2012;
--'Fitch Affirms University of Medicine and Dentistry of New Jersey', dated June 24, 2011;
--'Rutgers University, NJ', dated June 10, 2013.
Applicable Criteria and Related Research:
Rutgers, The State University of New Jersey
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=710196
U.S. College and University Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708049
Revenue-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=709499
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=793315
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