Moody's Cites 'Excellent Strategic Position' in Upgrading Penn State Credit Rating
February 29, 2016 11:00 AM
by Zach Berger
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Moody's Investor Services has recognized Penn State's "excellent strategic position," upgrading the university's credit rating on Feb. 26.

The credit rating firm gave Penn State a strong report, upgrading it to a Aa1 credit rating with a stable outlook on Feb. 26, one step up from last year.

This upgrade from Moody's comes at an interesting time for the university, with an eight-month budget impasse within the state legislature that could potentially leave Penn State with no state appropriation and a $300 million budget shortfall.

The Moody's report “recognizes Penn State’s exceptional liquidity enabling it to ably bridge the lack of Commonwealth of Pennsylvania appropriations due to the failure to enact its FY 2016 budget and strong operations from diverse and healthy revenue sources."

In its report, Moody's cited Penn State's "excellent strategic position" including the fact that it's one of the nation's leading public universities, has sustained philanthropic support, modest financial leverage, and strong governance practices.

Penn State's senior vice president for business and finance, David Gray, lauded the credit rating upgrade, noting its gravity during a time of financial instability for the university and Pennsylvania as a whole.

“In spite of numerous challenges and a turbulent environment, Moody’s action to upgrade the University’s credit rating recognizes Penn State’s considerable strength in student demand, philanthropy, research activity, and financial management," Gray said.

Moody's said that Penn State has expectations of growth in balance sheet reserves thanks to strong operations and good fundraising, success in research, high student demand, and manageable debt.

"Penn State will continue to enjoy a strong market position with good national student demand as a leading national research university," the firm said.

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