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IU receives upgrade for series M student fee revenue bonds
Dec. 2, 1999
BLOOMINGTON, Ind. -- Moody's Investor Service has assigned Indiana University an upgrade to an Aa2 rating for its $48 million of Series M Student Fee Bonds. This rating change from Aa3 to Aa2 reflects an upgrade in IU's broad general credit characteristics, with the credit outlook described as stable.
The rating upgrade was based on several factors, according to Judith G. Palmer, IU vice president and chief financial officer. They included:
"The upgrade in our bond ratings is further evidence of the outstanding quality, market strength and financial stability of Indiana University," Palmer said. "We are very pleased that the credit markets have recognized Indiana University's very sound financial condition as well as its position in a strong state economy. When the history of very steady and strong state support, especially in the area of debt service appropriations, is factored in, it provides investors with a very high level of comfort with Indiana University debt and results in lower financing costs."
In announcing the upgrade, Moody's said IU's stable outlook reflects its expectation of ongoing state reimbursement for the bulk of the university's debt levels, strong demand for the university's programs, ongoing growth in financial reserves, and manageable additional debt plans.
This week, IU successfully issued $48 million in student fee bonds to fund construction projects on three of its campuses.
"The improvement in the bond rating allows IU to borrow money at a lower cost, which reduces the costs to the state for projects receiving student fee replacement," said Steven A. Miller, university treasurer. "From an investor's viewpoint, the higher the rating, the less the chance the issuer will ever default. Because of this, investors are willing to accept a lower rate of return, which translates to a lower cost to IU and the state."
(DeAnna Hines, 812-855-0850, djhines@indiana.edu)