Fitch Ratings has affirmed the 'A+' ratings on the Georgia Tech Athletic Association's (GTAA) outstanding revenue bonds issued through the Development Authority of Fulton County.

The Rating Outlook is Stable.

The 'A+' rating reflects GTAA's high degree of alignment with the Georgia Institute of Technology (GIT, Georgia Tech), GIT's very strong underlying credit profile and GTAA's generally self-sufficient operations. The affirmation also reflects GTAA's effective response, working closely with GIT, to sharp pandemic-driven revenue declines in fiscal 2021.

Significant expense reductions, strong fundraising, support from GIT and strong investment returns to date are expected to limit reserve drawdowns in fiscal 2021. A return to more normal football and basketball seasons, bolstered by ACC Network, fundraising and other revenue initiatives, along with continued expense discipline, should help GTAA normalize operating performance over the next one to two years.

SECURITY

The bonds are a general unsecured obligation of GTAA, payable from all legally available funds.

KEY RATING DRIVERS

High Degree of Institutional Alignment: GTAA is considered a component unit of GIT and exists to administer a comprehensive intercollegiate athletics program on behalf of GIT. GTAA is a separately incorporated entity, and GIT has no legal obligation to repay GTAA's debt. GIT continues to support GTAA through student athletic fees, other operational and institutional support and support through affiliates such as the Georgia Tech Foundation. Substantial overlap in management and governance, closely coordinated and aligned priorities and shared brand identity between the two entities support Fitch's expectation of a continued strong relationship.

Georgia Tech's Very Strong Credit Profile: Fitch views GIT's credit profile as very strong based on its strong business profile and healthy enterprise-wide leverage position. Fitch considers GIT to have excellent revenue defensibility as a major research university with premier engineering and applied sciences programs. Georgia Tech has robust student demand and fundamental pricing flexibility, evidenced by continued solid enrollment growth through the pandemic.

GIT's very strong operating risk profile reflects stable cash flow margins and sustained healthy levels of capital investment supported by an effective fundraising culture. GIT also maintains a strong financial profile, with manageable enterprise-wide leverage, including affiliate liabilities and pension obligations, that Fitch expects would be very resilient to further operating or investment stresses.

Self-Supporting GTAA Operations: GTAA's core operating results have historically been breakeven on a cash basis over time, with solid fundraising rather than operating cash flow funding most capital needs. Cash losses in 2019 and 2020 reflected coaching turnover and early effects of the pandemic, but GTAA expects to return to balanced cash-based results in fiscals 2021 based on significant expense cuts, support from GIT, a line of credit and strong investment returns to date.

GTAA has also budgeted for and expects to return to balanced cash-basis operations for fiscal 2022 based on new revenue initiatives and continued expense discipline including its zero-based budgeting model. In March 2021, GTAA completed an athletics-specific campaign, raising approximately $175 million against its target of $125 million for facilities, endowments and operating support.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to positive rating action/upgrade:

--Increased direct or formal support from GIT for GTAA costs and/or debt;

--Substantial improvement over time in GTAA's operating performance and leverage.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

--Unexpected deterioration in GIT's very strong overall credit profile;

--Indication of reduced alignment with GIT or uncertainty about GIT's intent to support GTAA;

--Failure to maintain generally self-supporting operations including reserves and fundraising over time.

BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

CREDIT PROFILE

Established in 1934, GTAA is a nonprofit organization charged with administering the athletic programs of GIT. While legally separate from Georgia Tech, GTAA functions as GIT's collegiate athletic operation; this role is intended to remain for the life of the bonds. The Board of Regents of the University System of Georgia owns the land upon which GTAA owns, operates, and maintains its athletic facilities and related improvements. The property is leased to GTAA under long-term contracts at nominal cost. GTAA manages the facilities and is responsible for all operating and maintenance costs.

Founded in 1885, GIT is a large public research university that is part of and governed by the University System of Georgia. Georgia Tech is based in midtown Atlanta and serves nearly 40,000 students as of fall 2020.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG CONSIDERATIONS

Unless otherwise disclosed in this section, the highest level of ESG Credit Relevance is a Score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.