Moody’s Upgrades BU’s Bond Rating to A1 from A2

in News
February 26th, 2013

Credit judge applauds management and reputation

From BU Today:

Moody’s Investors Service has upgraded BU’s creditworthiness, a thumbs-up that stands in conspicuous contrast to the dour outlook the firm gave higher education in general just last month.

The rating agency recently raised the University’s bond rating to A1 from A2. Moody’s credit rating system ranges from Aaa to C, with numbers added within each grade for further differentiation. The rating measures an institution’s ability to pay back borrowed money on time and in full. The upgrade will help the University to realize lower future borrowing costs.

The upgrade “reflects BU’s sustained improvement in its student market and research profile following years of strategic governance and leadership changes that have elevated BU to a more competitive position,” Moody’s wrote in a report on its decision. “The University is also beginning to generate philanthropic support more in line with its size and prominence and has launched its first-ever comprehensive fundraising campaign.”

The report also cited several developments bolstering BU’s reputation, and thus confidence in the University’s finances: President Robert A. Brown’s drive to attract academically stronger undergraduates and international students; the boom in research at the University in the past two decades; BU’s admission into the Association of American Universities; and recent budget surpluses and major gifts. It also mentioned improved governance in the past decade by the trustees, including term limits, conflict of interest policies, fewer trustee committees, and the hiring of Brown, “a president capable of quickly elevating the university’s standing.”

Read the full story on BU Today.