Last modified: Tuesday, May 11, 2010
Moody's rates Indiana University credit at Aaa, its highest rating
FOR IMMEDIATE RELEASE
May 11, 2010
BLOOMINGTON, Ind. -- Moody's Investors Service has given Indiana University a credit rating of Aaa, the highest level possible. IU is one of only seven public universities to receive the Aaa rating.
The result comes from a recalibration as Moody's moves to a "global" system that provides comparable rating scales for public and private debt. Under the old system, Moody's had rated IU debt as Aa1.
"We are extremely pleased to be among a select group of universities that have received Moodys highest credit rating," said Indiana University President Michael A. McRobbie. "This rating will allow Indiana University to benefit from very low financing costs. It is also testament to our continuing fiscal discipline and efforts toward greater efficiency in how we use our resources, which are ensuring our flexibility and stability in these difficult economic times and allowing us to build upon the great progress we have made in recent years."
Officials said the rating will produce strong demand for future IU bond issues, resulting in lower costs of capital for the university. In accordance with state law, Indiana University issues debt to finance capital projects but not operating costs.
"At a time when American higher education faces extraordinary budgetary challenges, I am thrilled that Moody's has issued Indiana University its highest rating for financial strength," said IU Vice President and Chief Financial Officer Neil Theobald. "This announcement is obviously important because of the millions of dollars in reduced financing costs that will accrue to the state and to the university.
"It is also important, though, as a recognition of the skilled responsiveness demonstrated by IU's Board of Trustees and our financial team during the recent economic maelstrom. I would like to publicly thank the Trustees' Finance and Audit Committee Chair Tom Reilly and University Treasurer MaryFrances McCourt for their continuing leadership during this difficult period."
Indiana University currently has over $800 million in outstanding debt. It has plans to issue about $275 million in debt over the next year or so, but will also be retiring some earlier obligations.
McCourt, the IU treasurer, attributed the high rating to years of strong fiscal management at Indiana University and the state of Indiana. Another factor, she said, is a policy of transparency with Moody's and other ratings services. IU makes sure that agency representatives have access to information, meet with the university's senior fiscal managers and understand its financial goals and strategies.
"We are absolutely thrilled with this rating," McCourt said. "There is a strong demand for IU debt whenever we issue it, and this should only increase that demand."
Indiana University is part of an elite group of public institutions with a Moody's Aaa rating, including the University of Michigan, the University of Texas, the University of Virginia, the University of North Carolina, the University of Washington and Purdue University.