New York, November 16, 2012 -- Moody's Rating

Issue: Housing System Refunding Revenue Bonds Series 2012; Rating: A3; Sale Amount: $54,360,000; Expected Sale Date: 11-23-2012; Rating Description: Revenue: Public University Limited Pledge

Opinion

Moody's Investors Service has assigned an A3 rating to Northwest Missouri State University's ("Northwest") $54.4 million of Housing System Refunding Revenue Bonds, Series 2012. At this time, we have also affirmed the A3 ratings on the university's outstanding rated debt. The rating outlook is stable.

SUMMARY RATINGS RATIONALE:

The A3 rating reflects Northwest Missouri State University's market position as a regional public university with a healthy out-of-state student draw, satisfactory financial resource coverage of pro-forma debt and operations, growing net tuition per student, and management team engaged in careful budgeting. The rating also incorporates the 4.6% enrollment decline in fall 2012, weak operating margin in FY 2012 expected to continue into FY 2013, recent declines in state appropriations, as well as the very narrow revenue pledge for all three revenue bond pledges (Housing System, Recreation System and Parking System).

STRENGTHS

*Established market position as a regional university located in Maryville, MO, 95 miles north of Kansas City and 100 miles south of Omaha, Nebraska. The university had enrollment of 5,662 full-time equivalent (FTE) students in fall 2012, of which 93% were undergraduates and 31% were out-of-state.

*Significant expendable financial resource growth the past two fiscal years, from $24.9 million in FY 2010 to $41.1 million in FY 2012, lead to improved coverage of pro-forma debt and operations at 0.46 and 0.4 times respectively in FY 2012. There are currently no plans to draw down these reserves.

*Mandatory student fees dedicated to debt service payments that can be increased if necessary, coupled with a sum sufficient rate covenant and cash funded debt service reserve fund provide bondholder security. Student fee increases are not limited by a tuition freeze or state approval.

*Improving liquidity, though still thin, which is important given state appropriation reductions. Monthly liquidity of $19.4 million provided 79 days coverage of expenses (on an expense base of $101.6 million) and a healthy 2 times coverage of the foundation's variable rate debt.

CHALLENGES

*Thin debt service coverage from narrow revenue pledges provided by the Housing, Parking and Recreation System bonds. The university manages the coverage closely to the sum sufficient requirement, and the systems benefit from fund balances, which were used in 2009 to make up for insufficient debt service coverage from pledged revenues in the case of the Parking System bonds. See the LEGAL SECURITY section for additional information.

*Weakening operating performance, with an operating margin of 1.6% in FY 2012 down from 3.1% in FY 2011, is expected to continue into FY 2013 due to fall 2012 enrollment declines.

*Enrollment pressure, with a 4.6% decline in FTE enrollment for fall 2012, due primarily to weak high school demographics in the area combined with more Missouri students attending community college without paying tuition through the state's "A+ program". Management plans to reach out increasingly to out-of-state students to maintain enrollment levels.

*Declining state support from Aaa-rated State of Missouri, down 12.9% from $32.6 million in FY 2010 to $28.4 million in FY 2012, has pressured operating margins. Management has responded budgeting prudently and cutting expenses.

Outlook

Moody's stable outlook reflects the university's established market position and expectations for continued adequate balance sheet coverage of debt, the university's moral and strategic inclination to support debt service payments on the system bonds, limited future debt issuance, and expectations for at least break-even operating performance.

WHAT COULD CHANGE THE RATING UP

Stable enrollment and net tuition revenue growth combined with sustained improvement in operating performance; increased net assets and liquidity; strengthened debt service coverage from pledged revenues

WHAT COULD CHANGE THE RATING DOWN

Weakening of revenue at the housing, parking or recreation systems leading to weakened coverage; continued pressure on enrollment or limited net tuition per student growth; weakening of operating margin; decline in state appropriations; reduced liquidity; additional debt issuance without corresponding resource growth and revenues

RATING METHODOLOGY

The principal methodology used in this rating was U.S. Not-for-Profit Private and Public Higher Education published in August 2011. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody'sInvestors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

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Emily Schwarz Analyst Public Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Dennis M. Gephardt Vice President - Senior Analyst Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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