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University Bonds Rating Revised to 'Positive'; AA+ Rating Affirmed

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January 8, 2008

EVANSTON, Ill. --- Standard & Poor's Ratings Services has revised its outlook to "positive" and affirmed the 'AA+' rating on the Illinois Finance Authority's tax-exempt bonds issued for Northwestern University.

Standard & Poor's also affirmed its 'A-1+' rating on the University's outstanding parity short term debt.

"The positive outlook reflects our anticipation that a continuation of strong financial performance, growth of unrestricted financial resources, and improvement in demand could lead to a higher rating," said Standard & Poor's credit analyst Linda Eremita. "The University's credit profile benefits from exceptional liquidity, a strong track record of positive financial operations, and a solid management team."

Financial operations are consistently balanced with solid operating surpluses, according to Standard & Poor's. A large long-term investment pool and strong fund-raising coupled with the recent monetization of royalties provides revenue diversity and supports excellent liquidity ratios.

The firm said the 'AA+' rating reflects Northwestern's:

• Exceptional student quality (with a fall average SAT of 1421) an strong student demand for its comprehensive academic programs, evidenced by increasing freshman selectivity (to an impressive 24.8% in fall of 2007 from 34.2% in fall 2002)

• Excellent liquidity - supported by approximately $6.5 billion of total investments - further boosted by an estimated net cash receipt of $575 million on Dec. 19, 2007, related to the monetization of 50% of the University's associated with a drug that was invented at Northwestern

• Excellent history of positive financial operations, with very successful annual fundraising efforts

• A strong management team

Topics: University