Moody’s Improves Penn State’s Credit Ranking To Aa1
President Eric Barron spent a large portion of his report at Friday’s Board of Trustees meeting discussing strategic planning, how important it is for students to graduate in four years, and how the lack of a state appropriation is affecting and will continue to affect the university as time goes on.
Despite this potentially dark future, Barron ended his report by announcing he did have one bit of good news: Moody’s increased Penn State’s credit rating to Aa1.
“This is a signal that this is an extraordinarily well-run university that’s fiscally been quite conservative, and this is a tremendous vote of confidence that this university is run well, and I am very proud of our vice presidents that are deeply involved and committed when it comes to making sure that we have a successful institutions,” Barron said of the ranking.
The Aa1 rating brings Penn State back to where it used to be — the university improved from Aa2 to Aa1 November 2011. This year’s ranking is an increase from last year’s Aa2 credit rating, at which time the university garnered a “positive outlook.” In 2013, the university improved its rating after a downgrade in 2012 from the $59.7 million as a result of settlements following the Sandusky scandal. At the time, Moody’s predicted Penn State would be able to resolve the claims while maintaining and improving its already solid credit fundamentals.
Moody’s ratings determine the creditworthiness of the entities it analyzes by using a standardized set of factors. An Aa1 credit is the second-highest rating an entity can receive, and long-term it means the university is high-quality with a very low credit risk.
The university is expected to keep this Aa1 rating, as the increase also comes with a stable outlook from Moody’s. Follow along as the Board of Trustees’ February meeting continues in Hershey.