Rating agencies reaffirm Indiana University's top bond ratings

  • Feb. 28, 2017


BLOOMINGTON, Ind. -- S&P Global and Moody’s Investors Service have reaffirmed Indiana University’s top credit ratings, AAA and Aaa, respectively -- the highest ratings available. IU is among only seven public universities in the nation to achieve these ratings.

S&P said the ratings reflect their view of IU’s “extremely strong enterprise profile, characterized by solid demand with a broad geographic draw, large and stable enrollment profile in a multicampus system and excellent management of resources.” Moody’s said its ratings reflect IU’s “strong student demand and research activities, favorable operating cash flow, healthy liquidity and moderate additional debt.”

“These ratings reinforce the university’s strong financial condition,” IU Treasurer Don Lukes said. “Our strong balance sheet and operating performance allow us to keep tuition as low as possible, while protecting the quality of our education. Additionally, our initiatives around student affordability and the success of the financial literacy program in reducing student debt loads, as well as what IU is doing to manage risk, help provide a comprehensive view of sound financial management of the university for the ratings agencies.”

The S&P Global rating is based on an agency methodology for not-for-profit colleges and universities published in January 2017. It affects about $940 million in outstanding IU debt and $83 million that has been raised for two projects: the IU Memorial Stadium south end zone project, a $53 million, 66,575-square-foot addition that will house the Excellence Academy as well as offer a center for elite athlete development; and the Eskenazi Museum of Art renovation, a $30 million project that will result in additional space for galleries, museum support services and visitor amenities.

According to Lukes, the ratings will produce an even stronger demand for IU bond issues, enhancing the university’s ability to access financial markets and resulting in lower borrowing costs. By state law, IU may issue debt to finance capital projects but not operating costs.

IU’s debt achieved S&P’s AAA rating for the first time in January 2016. Moody’s has rated IU’s debt as Aaa since May 2010.

Other public universities rated AAA by S&P and Aaa by Moody’s are the University of Michigan, the University of North Carolina-Chapel Hill, Purdue University, the University of Texas, the University of Virginia and Texas A&M. The University of Washington is rated Aaa by Moody's.

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Margie Smith-Simmons