Research: Rating Action: Moody’s assigns VMIG 1 to Series 2022C-2 and 2022D-2 from Emory University (GA)

0

New York, August 02, 2022 — Moody’s Investors Service has assigned Emory University (GA) short-term revenue bond ratings VMIG 1 of approximately $68 million of Emory University revenue bonds, Series 2022C-2 (Daily Rate Bonds) and approximately $111 million of Emory University Revenue Bonds, Federally Taxable Series 2022D-2 (Weekly Rate Bonds) in connection with the issuance of Federally Taxable Bonds. purchase of separate Standby Bonds (SBPAs) to be provided by Royal Bank of Canada (RBC) beginning August 11, 2022. Moody’s maintains an Aa2 issuer rating for Emory University as well as an Aa2 long-term rating for these bonds and the debt at parity.

RATINGS RATIONALE

The assignment of short-term VMIG 1 ratings to Series 2022 C-2 and 2022 D-2 bonds is based on the credit quality of Royal Bank of Canada (RBC) as the provider of liquidity support in the form SBPAs for Series 2022 C-2 and Series 2022 D-2, and, Moody’s assessment of the limited likelihood of early termination of the SBPAs without a mandatory tender. Moody’s short-term counterparty risk rating for RBC is P-1(cr). Events that could result in the termination of the SBPAs without a mandatory bond purchase are directly related to Emory’s long-term credit quality.

FACTORS THAT CAN LEAD TO IMPROVED RATINGS

– Not applicable

FACTORS THAT MAY LEAD TO LOWER RATINGS

– RBC short-term CR rating downgrade

– Degradation of several notches of the long-term rating of bonds

LEGAL SECURITY

Liquidity support for tenders

RBC’s obligations under the SBPAs may be automatically terminated or suspended if:

– failure by Emory to make payment of principal or interest on the Bonds or any senior or parity debt with the Bonds; – one or more monetary judgments equal to or greater than $25 million against Emory remain unpaid or otherwise unsatisfied for a period of 60 days. – the bankruptcy or insolvency of Emory; – any provision of the SBPAs, the Trust Indenture, the Bonds or the Loan Agreement relating to the payment of principal and interest on the Bonds or to the security of the Bonds shall, for any reason, cease to apply. be valid and binding on Emory; or the validity or enforceability of any provision relating to the payment of principal and interest on the bonds or the security of the bonds, will be contested by Emory; or any governmental authority having jurisdiction over Emory shall make any decision or render any judgment or order challenging the validity or enforceability of any material provision of the SBPAs, the Indenture, the Bonds or the Loan Agreement relating to the payment of principal and interest on bonds or the security of bonds; or Emory denies or disputes its obligation under the SBPAs, the Indenture, the Bonds, the Loan Agreement or the Bonds Purchased. – Emory or any other governmental authority having jurisdiction over Emory imposes a debt moratorium, debt restructuring or comparable extraordinary restriction on the repayment of principal or interest on any parity debt, debentures or any indebtedness of Emory; – each rating agency rating the Notes lowers its long-term unenhanced rating assigned to Emory’s debt below investment grade or withdraws or suspends such rating, in each case for a credit-related reason

Series 2022 C-2 bonds will be issued in daily mode while Series 2022 D-2 bonds will be issued in weekly mode. The indenture allows the bonds to be converted, in whole by series, into daily, two-day, weekly, index, short-term, forward or fixed-rate modes. The bonds thus converted will be the subject of a mandatory offer upon conversion. Each SBPA supports bonds in daily and weekly rate modes only. Moody’s current short-term ratings apply only when the bonds are in daily or weekly rate mode. Bonds in the daily and weekly rate modes pay interest on the first business day of each month.

Bondholders may, at their option, offer Bonds (i) in daily rate mode on any Business Day with notice to the Trustee and the Remarketing Agent prior to 10:00 a.m., New York City time; (ii) during the weekly pricing mode on any business day with at least seven days notice to the trustee and the remarketing agent.

The bonds are subject to a mandatory tender on: (i) each date of conversion into interest rate mode; (ii) each substitution date; (iii) the fifth day immediately preceding the expiry date of the applicable SBPA; (iv) the third Business Day following receipt by the Trustee of notice from RBC that an Event of Default under the applicable SBPA has occurred and directing a mandatory tender of the Bonds; and (v) the fifth day immediately preceding the date on which RBC’s obligation to purchase the Eligible Bonds is voluntarily terminated by Emory.

Each SBPA is sized for the full principal amount of the bonds plus 34 days interest at 12%, the maximum rate applicable to the bonds. Each SBPA is available to pay the purchase price to the extent insufficient remarketing proceeds are received. Draws on SBPAs received by 11:30 a.m., New York time, will be honored at 2:00 p.m., New York time, on the same business day. Prints will be reinstated upon reimbursement of such prints.

The engagement under each SBPA will terminate on the earliest of the following dates: (i) August 10, 2027, scheduled expiration date; (ii) the date on which no eligible bonds are outstanding; (iii) the date RBC’s engagement under each SBPA terminates (8th day after the Trustee’s receipt of notice of an event of default under the applicable SBPA); (iv) the business day following the date of conversion of all obligations into a mode other than daily or weekly; (v) the business day following the substitution of the applicable SBPA; and (v) the date the engagement available under the SBPAs is voluntarily terminated by Emory.

PROFILE

Emory University is a large, private, comprehensive research university located in Atlanta, Georgia, with 15,061 full-time equivalent (FTE) students as of fall 2021. The university includes the Woodruff Health Sciences Center, along with the medical schools , Emory Nursing and Public Health with Emory Healthcare, its healthcare operations system. For fiscal 2021, Emory reported $7.5 billion in consolidated operating revenue, including $5.1 billion in patient care revenue.

METHODOLOGY

The main methodology used in these ratings was Variable Rate Instruments Supported by Conditional Liquidity Facilities published in March 2017 and available at https://ratings.moodys.com/api/rmc-documents/68283. Otherwise, please see the Scoring Methodologies page on https://ratings.moodys.com for a copy of this methodology.

REGULATORY INFORMATION

For details on key rating assumptions and Moody’s sensitivity analysis, see the Methodological Assumptions and Sensitivity to Assumptions sections in the Disclosure Form. Moody’s rating symbols and definitions can be found at https://ratings.moodys.com/rating-definitions.

For ratings issued on a program, series, category/class of debt or security, this announcement provides certain regulatory information regarding each rating of a subsequently issued bond or note of the same series, category/class of debt, security or under a program for which ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a media provider, this announcement provides certain regulatory information relating to the credit rating action on the media provider and each particular credit rating action for securities whose credit ratings are derived from the support provider’s credit rating. For the provisional ratings, this press release provides certain regulatory information relating to the provisional rating assigned, and to a final rating that may be assigned after the final issuance of the debt, in each case where the structure and conditions of the transaction n have not changed prior to the final rating being assigned in a way that would have affected the rating. For more information, please see the issuer/transaction page of the respective issuer at https://ratings.moodys.com.

The ratings have been communicated to the rated entity or its designated agent(s) and issued without modification resulting from such communication.

These notes are solicited. Please refer to Moody’s Policy for the Designation and Assignment of Unsolicited Credit Ratings available on its website. https://ratings.moodys.com.

The regulatory information contained in this press release applies to the credit rating and, if applicable, the outlook or rating revision relating thereto.

Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis are available at https://ratings.moodys.com/documents/PBC_1288235.

The worldwide credit rating on this credit rating announcement has been issued by one of Moody’s affiliates outside the EU and is approved by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main. -le-Main 60322, Germany, in accordance with Article 4(3) of Regulation (EC) No 1060/2009 on credit rating agencies. Further information on the EU approval status and the Moody’s office that issued the credit rating can be found at https://ratings.moodys.com.

The worldwide credit rating on this credit rating announcement has been issued by one of Moody’s affiliates outside the UK and is approved by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the United Kingdom. . Further information on the UK endorsement status and the Moody’s office that issued the credit rating can be found at https://ratings.moodys.com.

Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and Moody’s legal entity that issued the rating.

Please see the issuer/transaction page at https://ratings.moodys.com for additional regulatory information for each credit rating.

Mary Coney
Senior Analyst
Higher Education
Moody’s Investors Service, Inc.
7 World Trade Center
250 Greenwich Street
New York 10007
UNITED STATES
JOURNALISTS: 1 212 553 0376
Customer service: 1 212 553 1653

rachel mcdonald
Additional contact person
Lodging
JOURNALISTS: 1 212 553 0376
Customer service: 1 212 553 1653

Release Office:
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
UNITED STATES
JOURNALISTS: 1 212 553 0376
Customer service: 1 212 553 1653

Share.

Comments are closed.