NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the 'A+' rating on the following series of bonds issued on behalf of the Sisters of Mercy of the Americas South Central Community Obligated Group (SOMASCC) (formerly the Sisters of Mercy of the Americas, Regional Community of Cincinnati Obligated Group):
--$14.8 million Louisville/Jefferson County Metro Government, industrial building revenue bonds, series 2006;
--$5.3 million Port Authority of Greater Cincinnati Development Authority, economic development revenue bonds, series 2006.
The Rating Outlook is Stable.
SECURITY
The bonds are a joint and several obligation of the obligated group, secured by a gross receipts pledge and negative lien pledge.
KEY RATING DRIVERS
HEALTHY LIQUIDITY: Balance sheet liquidity remains strong for the rating category, with available funds of $383 million, covering fiscal 2012 operating expenses and total debt by a healthy 424% and 807%, respectively.
CONTINUED VOLATILITY IN ENROLLMENT: There remains instability in the enrollment levels in the obligated group's high schools. While the fluctuations are of concern, it is important to note that tuition revenues account for less than 26% of the obligated group's total operating revenues.
MANAGEABLE DEBT BURDEN: The debt burden is high but manageable at approximately 10.1%, including loan guarantees. The high level is somewhat mitigated by the strong financial cushion and lack of additional debt plans.
RATING SENSITIVITIES
INVESTMENT PERFORMANCE: While unanticipated at this time, a significant decline in balance sheet resources could negatively affect the rating and/or Outlook.
CREDIT PROFILE
Members of the obligated group include four all-girls Catholic high schools and SOMASCC, a Roman Catholic congregation of religious women who serve the poor, sick and uneducated, and operate nursing homes for elderly sisters. The schools are McAuley High School and Mother of Mercy High School, located in Cincinnati, and Assumption High School and Academy of Our Lady of Mercy High School, located in Louisville.
Prior to 2008, there were 25 regional organizations of sisters that were subsequently merged into five. With this merger SOMASCC's resources increased substantially, from approximately $104 million to $401 million.
In fiscal 2012, available funds totaled $383 million, providing a healthy 424% coverage of operating expenses and an even stronger 807% coverage of debt. While the fiscal 2013 audit is not yet available, it is expected to show another strong year, based on preliminary data.
Operationally, fiscal 2012 showed a positive margin, at 0.8%, versus fiscals 2010 and 2011 which showed deficits of 14% and 11%, respectively. The obligated group's performance is impacted largely by investment performance and gift receipts. In fiscal 2012, an unusually large gift of $12 million was received.
Additional information is available at 'www.fitchratings.com'
Applicable Criteria and Related Research:
--'U.S. Nonprofit Institutions Rating Criteria', dated June 7, 2013;
--'Fitch Affirms Sisters of Mercy of the Americas South Central Community Obligated Group Revs at 'A+'; Outlook Stable', dated Dec. 15, 2011.
Applicable Criteria and Related Research:
U.S. Nonprofit Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=709091
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=807919
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