Moody's upgrades UConn's bond ratings

Connor Linskey, The Chronicle, Willimantic, Conn.
·2 min read

Oct. 24—STORRS MANSFIELD — Moody's Investors Service has upgraded its ratings of the University of Connecticut's outstanding revenue bonds as well as bonds in an upcoming sale, affirming the strength of UConn's fiscal management.

Moody's assigned an Aa3 rating to UConn's proposed $ 50 million of Special Obligation Student Fee Revenue Bonds, 2022 Refunding Series A.

In that same announcement, Moody's also said it had upgraded the university's outstanding student fee revenue bonds to Aa3 from A1.

" The affirmation of UConn's Aa3 issuer rating is supported by its excellent brand and strategic positioning, strong state financial support and substantial wealth and scale," Moody's said. " It maintains a regionally important role as a flagship land grant university with favorable student demand, growing research activity and comprehensive academic programming. Credit quality is aided by its strong ties to the State of Connecticut, which provides generous operating support and fully covers the debt service on about 86 percent of the university's debt obligations. Strong financial management and significant economies of scale will support a return to balanced operations following a moderate pandemic- driven deficit in fiscal 2021. Credit challenges include the very high adjusted and direct leverage, modest liquidity and moderate financial reserve coverage of expenses."

Lloyd Blanchard, UConn's interim vice president for finance and chief financial officer, was pleased with the upgrades to the university's bond ratings.

" The Moody's rating upgrade highlights the university's strong academic and research profile, record student demand and commitment to our financial bottom line," Blanchard said. " We are proud to earn this rating upgrade, which we expect will reduce our long-term borrowing costs and allow us to invest additional resources on our students."

Connecticut State Treasurer Shawn T. Wooden said UConn's upgraded bond ratings are not only great for the university but also for the state.

" Moody's decision to upgrade UConn's Student Fee Revenue Bonds is great news for Connecticut," Wooden said. " It reflects Moody's assessment of UConn's importance to the State of Connecticut as both a research institution and an economic hub."

Moody's is one of the entities that assigns ratings to bond issuances. This allows investors to assess risks as they consider which bonds to purchase. Higher ratings translate to lower borrowing costs for those issuing the bonds. The bond sale proceeds are used for the project costs and the borrowers repay the bond debts over a set period of time.

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