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Revenue Bonds Earn Highest Credit Ratings

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October 3, 2006

Two nationally recognized credit rating services have assigned their highest ratings to $145.3 million in Revenue Bonds, Series 2006, sold by Northwestern University on Sept. 19.  

The bonds, authorized by the Illinois Finance Authority, will be used to advance refund the University's Series 1997 Adjustable Medium Term Revenue Bonds and pay the costs of issuance.

The highest ratings were awarded by Moody's Investors Service and Fitch Ratings.

Moody's Investors Service assigned an Aaa long-term rating to the bonds and also upgraded the University's rating on all of its long-term debt to Aaa from Aa1. Moody's also affirmed the P-1 rating on Northwestern's commercial paper program.

Fitch Ratings assigned an AAA rating to the revenue bonds. Fitch also assigned an AAA to outstanding series 1993, 1997, and 2003 revenue bonds and 2003 refunding bonds. In addition, Fitch assigned an AAA/F1+ rating to the series 2004 variable-rate bonds and an F1+ to Northwestern's $200 million taxable commercial paper program.

Both Moody's and Fitch noted the University's sustained strengthening of student market position, continued growth in already substantial financial resources, consistent history of favorable operating performance, and manageable debt plans during the intermediate period. Northwestern's strengths in total financial resources; research growth; revenue diversity, endowment performance and an experienced financial management team were also highlighted by Fitch. 

The third nationally recognized rating agency, Standard & Poor's Ratings Services, assigned its AA+ rating to the bonds. In addition, Standard & Poor's affirmed its A-1+ and AA+ ratings on the University's outstanding debt.

S&P also confirmed the University's exceptional student quality and strong student demand, with a freshman selectively rate of 29 percent; strong liquidity, supported by a large endowment; and history of positive financial operations, with a $87.4 million operating surplus generated in fiscal 2005; successful fundraising efforts, exceeding the recent $1.5 billion campaign goal; and manageable debt burden.

There are only 11 other major private comprehensive research universities currently with an AAA rating from the three agencies (California Institute of Technology, Columbia, Dartmouth, Harvard, MIT, Princeton, Rice, Stanford, Notre Dame, Washington University and Yale) and only three public universities with an AAA rating (Michigan, Texas System, Virginia).

This puts the University in an excellent peer group, and provides worthy recognition for the University's recent 25-year record of consistent financial stewardship and management, said Ingrid Stafford, University associate vice president for financial operations and treasurer.