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University's debt rating upgraded to AA

Virginia Tech Spectrum, October 31, 1996

Standard & Poors has upgraded the university debt rating from A to AA and Moody's has continued its A1 rating, but changed its outlook from neutral to positive.

"This is good news. The upgraded debt rating should result in considerable annual savings over the next 20 years. We soon will be issuing more than $50 million in new debt for campus capital projects and refunding about $30 million of existing debt," said a pleased Ray Smoot, vice president for finance and treasurer.

Debt ratings are based on intensive review of university financial information and other factors contributing to its financial health. Included among rating criteria are student selectivity, condition of physical facilities, university debt burden, and perceived strength of "university management."

"This clean bill of health is particularly gratifying in light of the past several years of financial challenges," said Smoot.

In assessing their rating upgrade, S&P cited continued strong demand for admission, manageable debt levels, a solid management team, and impressive campus facilities. Moody's cited the university's endowment growth, improved fund raising, improving financial position, favorable investment returns, and a manageable debt burden.