U.S. PUBLIC FINANCE

CREDIT OPINION23 October 2018

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Diane F. Viacava +1.212.553.4734VP-Sr Credit Officerdiane.viacava@moodys.com

Dennis M. Gephardt +1.212.553.7209VP-Sr Credit Officerdennis.gephardt@moodys.com

Jared Brewster +1.212.553.4453AVP-Analystjared.brewster@moodys.com

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University of Notre Dame du Lac, INUpdate to credit analysis

SummaryThe University of Notre Dame du Lac's (Notre Dame, Aaa stable) exceptional credit profilereflects its exceptional strategic position as a premier, academically selective Catholicresearch university with a strong national and international brand amidst fierce competition.The university's robust financial reserves and excellent unrestricted liquidity support debt andoperations. Notre Dame's remarkable fundraising prowess and strong operating cash flowwill drive further growth in balance sheet reserves. The university has strong goverance andmanagement, with excellent fiscal oversight producing strong operations, which is neededgiven its moderately high reliance on endowment earnings for operations. Debt, comprisedof bullet maturities, remains moderate but has increased in recent years to partially fund theextensive capital spending.

Exhibit 1

Robust balance sheet reserves cushioning debt

0.0

2.0

4.0

6.0

8.0

10.0

12.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

2013 2014 2015 2016 2017 2017 Sensitivityw/ $400M CP

Mill

ions

Spendable Cash & Investments ($B) Spendable Cash & Investments to Total Debt (x)

2017 Sensitivity includes Series 2017 bonds and full $400M CP issuanceSource: Moody's Investors Service

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Credit strengths

» Very strong national student demand as a premier, highly selective large Catholic research university

» Robust balance sheet resources and liquidity, with fiscal 2017 (ending June 30) unrestricted monthly liquidity of $2.9 billion, or 954monthly days cash on hand

» Consistently strong operating surpluses driven by prudent financial management

» Active investment management function contributes to high performance and exceptional long-term investment returns

» Strong fundraising bolsters balance sheet growth and funding capital projects, with three-year average gift revenue of $428 millionper year

Credit challenges

» Intense national competition for the most talented students with the other leading and well-endowed universities

» Moderate capital plans, renewal and maintenance projects partially debt funded

» Vulnerability to impact of investment losses and drag on endowment spending from its moderately high 36% reliance oninvestment income for operating revenues

» Most debt in long-dated bullet maturities, underscoring the need for active asset-liability management

Rating outlookThe stable outlook reflects expected strong national student demand, strong and growing balance sheet reserves, strong cash flowgeneration and manageable debt plans.

Factors that could lead to an upgrade

» Not applicable

Factors that could lead to a downgrade

» Weakened balance sheet reserves or liquidity, particularly if combined with significant debt issuance

» Sustained deterioration in operations and cash flow generation

» Weakened philanthropic support

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 23 October 2018 University of Notre Dame du Lac, IN: Update to credit analysis

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Key indicators

Exhibit 2UNIVERSITY OF NOTRE DAME DU LAC, IN

2013 2014 2015 2016 2017

2017 Sensitivity

w/ full $400M CP &

Series 2017

Median: Aaa Rated

Private

Universities

Total FTE Enrollment 11,980 12,055 12,178 12,255 12,326 12,326 9,724

Operating Revenue ($000) 1,077,826 1,169,846 1,247,319 1,326,537 1,379,219 1,379,219 1,603,682

Annual Change in Operating Revenue (%) 6.3 8.5 6.6 6.4 4.0 4.0 3.7

Total Cash & Investments ($000) 8,172,818 9,514,437 10,270,591 9,920,407 10,970,623 10,970,623 10,890,517

Total Debt ($000) 885,550 804,883 922,135 1,011,335 1,106,162 1,548,305 1,492,932

Spendable Cash & Investments to Total Debt (x) 7.6 9.9 9.3 8.0 8.1 5.8 6.4

Spendable Cash & Investments to Operating Expenses (x) 7.0 7.9 8.1 7.3 7.7 7.7 7.7

Monthly Days Cash on Hand (x) 513 549 729 726 954 954 828

Operating Cash Flow Margin (%) 19.2 21.3 22.6 23.8 22.8 22.8 20.5

Total Debt to Cash Flow (x) 4.3 3.2 3.3 3.2 3.5 4.9 4.9

Annual Debt Service Coverage (x) 6.0 8.5 8.6 9.2 8.9 8.9 3.7

2017 Sensitivity includes full $400M CP issuance and Series 2017 bonds issued in DecemberSource: Moody's Investors Service

ProfileLocated in Notre Dame, Indiana, the University of Notre Dame was founded in 1842 by the Congregation of Holy Cross. It is a largeprivate Catholic research university, with a residential undergraduate program and graduate and professional programs. For fiscal 2017the university had $1.4 billion of operating revenues with nearly $11 billion in cash and investments.

Detailed credit considerations

Market profile: prominent market leadership as academically selective, Catholic research university driving strong studentdemandThe University of Notre Dame will enjoy strong national student demand driven by its market leadership as a premier academicallyselective, national Catholic research university. Fall 2017 enrollment was over 12,300 full time equivalent students, with about 70%undergraduate. Notre Dame is increasingly selective, accepting less than 18% of applicants and is the first choice for many applicantswith 57% of accepted students enrolling. Continuing its emphasis on the residential undergraduate experience Notre Dame nowrequires first-year, sophomore and juniors to live on campus.

Notre Dame shows steady net tuition revenue growth, notable given its policy of need-blind admission and commitment to fundunmet need. Net tuition per student of $26,092 for fiscal 2017 is up over 3% from the prior year and nearly 15% since fiscal 2012. Theincrease is driven by regular price increases in tuition and student charges. Total tuition discount is rising slightly to 47% in fiscal 2017from about 44% in fiscal 2012, increasingly funded from endowment as Notre Dame’s endowment grows from gifts and endowmentinvestment returns.

The university has invested in its research activities, driving growth in awards. Notre Dame reported $130 million in researchexpenditures in fiscal 2017, up from $107 million in fiscal 2014. It reported nearly $140 million in awards in fiscal 2017, particularlynoteworthy since Notre Dame has no medical school, often an important driver of institutional research activity.

Operating performance: consistently strong operations and cash flow generationNotre Dame will continue to produce strong operations and cash flow driven by careful fiscal oversight and strong core revenue sourcesincluding gift revenue. For fiscal 2017 the university produced a three-year average operating margin over 15% and a strong coreoperating performance with an 8% operating margin excluding gifts. Cash flow is similarly strong, with a 23% operating cash flowmargin for fiscal 2017.

Revenue sources are diverse, with revenues from student charges contributing 43% of fiscal 2017 operating revenues, almost doublethe 24% median for Aaa-rated private universities. This is largely due to its research activity that, although growing, at 10% of revenues

3 23 October 2018 University of Notre Dame du Lac, IN: Update to credit analysis

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is lower than the 16% median. Investment income is the second largest revenue contributor at 36%, only slightly below the Aaamedian of 40%. Gift revenues of 8% are comparable to the Aaa-median.

Wealth and liquidity: robust balance sheet reserves with strong liquidity, including coverage of commercial paper programThe University of Notre Dame has exceptional balance sheet resources and strong internal liquidity. Total cash and investments,excluding those funds managed for other religious organizations, grew to nearly $11 billion for fiscal 2017, amongst the largestendowments of private universities. Notably most of the investments carry no permanent donor restrictions, with spendable cash andinvestments of $9 billion representing over 80% of the total. The university manages about $1 billion for other religious organizations,including Saint Mary's College (A3 stable, located adjacent to campus).

Notre Dame has a strong internal investment management function, with a Chief Investment Officer overseeing 16 investmentprofessionals. For the twelve month period ending 6/30/2017, it reported a 12.6% annual investment return, within the range of returnsfor most institutions. Five and ten-year returns have been consistently above benchmarks and many peer institutions. The investmentportfolio is highly diversified, with target allocation of 40% in public equities, 30% private equity and 30% multi-strategy.

Notre Dame is a fundraising leader, with $428 million of average gift revenues for fiscals 2015 through 2017. In August 2017 theuniversity publicly announced its “Boldly Notre Dame” campaign. Although the campaign is comprehensive, Notre Dame hasannounced the single highest priority is $1 billion for undergraduate student financial aid. In the prior campaign the university raisedmore than $2.0 billion against the $1.5 billion goal. That campaign showed nearly 68% alumni participation, reflecting Notre Dame’sloyal and highly supportive alumni base.

LiquidityLiquidity is excellent, with $2.9 billion of unrestricted monthly liquidity or 954 days. Monthly liquidity to pro forma demand debt, withthe full $400 million CP issued, is strong at 659%, mitigating the debt structure comprised largely of long-dated bullet maturities withrelatively lower principal amortization in early years.

Notre Dame will shortly launch a $400 million Taxable CP program supported by self liquidity, with issuance intended for generaluniversity purposes. This will replace the current $200 million CP program, to be closed by November 1 with no CP outstanding,supported by a bank SBPA. The university has a limit of no more than $50 million of CP maturing on one day and $250 million overa five business day period. Notre Dame has a highly capable treasury management team to oversee its self liquidity program withappropriate procedures to address a failed remarketing of the commercial paper.

Included in Moody's daily liquidity calculations is a total of $525 million of four bank facilities. The bank facilities are from JPMorganChase Bank, N.A. ($200 million), PNC Bank, N.A. ($100 million), Bank of America, N.A. ($100 million) and BMO Harris Bank NationalAssociation ($125 million). All agreements mature on different days in 2021 or 2022. Moody’s believes that the events of defaultallowing immediate termination under all existing facilities meet Moody’s rating criteria to be included as daily liquidity.

At August 31, 2018 discounted daily liquidity assets totaled $350 million, largely comprised of US treasury and agency bonds. Moody’scalculated total daily liquidity covered the $250 million weekly limit 3.5x with and 1.4x excluding the bank facilities. Monthly coverageover the past year has been generally consistent. The diversity of the bank facilities by providers and expiration dates, reducing thelikelihood of all facilities not being accessible, mitigate the thinner coverage excluding the bank lines. Additionally, Notre Dame hasaccess to other funds available, including an average of about $1 billion of discounted weekly liquidity.

Leverage: manageable leverage with conservative debt policyUniversity of Notre Dame’s manageable leverage will continue due to its strong balance sheet cushion and prudent debt utilization.Calculated pro forma debt includes full $400 million issuance of CP and the series 2017 bonds issued after its June 30, 2017 fiscal year-end. Spendable cash and investments cushion pro forma debt 5.8x, a strong cushion and only slightly below the 6.1x Aaa-median. Debtto cash flow is also moderate at 4.9x.

The university is fairly conservative in its debt policy, a key underpinning of the Aaa rating, with much of its extensive capital spendingfunded from gifts and operating cash flow. Notre Dame currently plans to issue about $100-$150 million of new money debt in aboutthree years to fund infrastructure and facilities renewal projects. The current capital and financing plans are manageable given expectedbalance sheet growth from gifts and retained operating cash flow.

4 23 October 2018 University of Notre Dame du Lac, IN: Update to credit analysis

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Debt structureAssuming the full $400 million CP issuance, about 71% of Notre Dame’s pro forma debt is fixed rate, with most having bulletmaturities.

Legal securityAll of Notre Dame’s debt and commercial paper are unsecured general obligations of the university and on parity.

Debt-related derivativesNotre Dame is counterparty to a forward starting fixed rate swap of $155 million notional. The effective start date is March 1, 2021.Given its ample financial resources, strong cash flow, and sophisticated management, the risks associated with these arrangements aremanageable within the Aaa rating.

PENSIONS AND OPEBNotre Dame has manageable exposure to post-retirement benefits, with related expenses accounting for about 4% of fiscal 2017operating expenses. It offers a DC, DB and post-retirement medical benefits (OPEB). At June 30, 2017 Notre Dame reported an$84 million unfunded pension liability and a $50 million OPEB liability. Effective December 31, 2017 the DB plan is closed to newparticipants and current plan participants were given a one-time opportunity to remain in the plan or move to the DC plan.

Governance and management: strong planning, budgeting & oversight contribute to exceptional strategic positionNotre Dame’s strong senior leadership team and its oversight of planning and budgeting while maintaining its mission contributes tothe university’s exceptional strategic position. The board has a framework of investment in its academic programs, research activity,and capital projects. Already committed to sustainability, the university has launched new efforts to amplify Pope Francis recentenvironmental commitment, including working with the City of South Bend to construct a hydroelectric facility. The board continues tobroaden Notre Dame’s already expansive global footprint through its gateways, centers and offices.

5 23 October 2018 University of Notre Dame du Lac, IN: Update to credit analysis

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6 23 October 2018 University of Notre Dame du Lac, IN: Update to credit analysis

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7 23 October 2018 University of Notre Dame du Lac, IN: Update to credit analysis

This document has been prepared for the use of Beth Swift and is protected by law. It may not be copied, transferred or disseminated unless authorizedunder a contract with Moody's or otherwise authorized in writing by Moody's.