Standard and Poor's issues highest credit rating for Indiana University

  • Feb. 25, 2016


BLOOMINGTON, Ind. -- Standard & Poor’s Ratings Services has increased its rating for bonds issued by Indiana University to AAA, the highest available. IU becomes one of only six U.S. public universities to achieve the highest rating from both Standard & Poor’s and Moody’s Investor Service.

Standard & Poor’s announced the increase today, citing the university’s excellent financial planning, extremely strong enterprise and financial profiles, large and stable enrollment and solid state support.

“We are thrilled with the Standard & Poor's upgrade to AAA,” said MaryFrances McCourt, IU senior vice president and chief financial officer. “This is a testament to excellent stewardship of our resources, best-in-class fiscal planning and the strength of IU’s management team, from the Board of Trustees to President Michael McRobbie to our senior leadership.

“I am particularly proud of the thought and commitment of our finance staff, who continually push for excellence in all we do. It has been an honor and a privilege to work with this team,” said McCourt, who will leave IU next month to become vice president of finance and treasurer at the University of Pennsylvania.

The rating is based on an agency methodology for non-for-profit colleges and universities published in January 2016. It affects about $956 million in outstanding IU debt and $86 million that will be issued next week in part to fund the renovation of Wells Quad on the Bloomington campus. The renovation will convert Goodbody and Memorial halls to student housing. A 200-seat dining hall addition is also planned to Goodbody Hall.

Don Lukes, Indiana University treasurer, said the AAA rating 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.

“It’s an affirmation from another outside party of the strong financial performance of the university,” Lukes said. “Our initiatives around student affordability, the success of the financial literacy program in reducing student debt loads, as well as what the university is doing to manage risk -- the ratings agencies look at all those things to paint a full picture of the university.”

Standard & Poor’s, in an announcement of the ratings increase, referred to the university's diverse revenue stream, large endowment and significant financial autonomy and independence.

“We assessed IU’s enterprise profile as extremely strong characterized by solid demand with a broad geographic draw, large and stable enrollment profile in a multi-campus system, and excellent management of resources,” it said. “We assessed IU’s financial profile as extremely strong characterized by consistently positive financial operations, manageable debt burden, solid available resources and excellent fiscal planning.”

Moody’s Investor Service has rated Indiana University’s debt as Aaa, the highest rating available, since May 2010. Other public universities that are rated AAA by Standard & Poor’s and Aaa by Moody’s are the University of Michigan, the University of North Carolina-Chapel Hill, Purdue University, the University of Texas and the University of Virginia. Texas A&M and the University of Washington are rated Aaa by Moody's.

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