Amid the significant University changes undergone in recent months, Moody’s Investors Services announced earlier this month that it has revised the the outlook on the University’s revenue bond rating to positive.
The University’s bond rating outlook reflects the recent sale of the Manhattan campus for $219 million, which “could more than double the University’s unrestricted financial resources,” according to Moody’s, along with greatly improving operating flexibility.
Sharon Hewitt Watkins, vice president for business affairs and Chief Financial Officer of the University, said in an email, “We are extremely pleased that Moody’s has revised its credit rating outlook for St. John’s from ‘stable’ to ‘positive’. Particularly in these challenging times in higher education, the fiscal strength of the University is critical to ensuring our students’ success.”
Moody’s said the revised positive rating is based upon its marketing position of the University as a large Catholic institution located within New York City.
Factors that Moody’s said it considered in revising the rating to positive include its favorable operating performance and its solid fundraising in which it raises $18.8 million a year in average gift revenue.
But Moody’s cited potential challenges faced by the University in the near future, as well.
“These credit strengths are offset by high leverage, senior leadership transition with the recent departure of a long-standing president and the need for continual capital investment as the university continues to focus on becoming more residential,” Moody’s said in a statement.
“The highly competitive environment in which the university operates is also a major challenge, putting pressure on the future growth of net tuition revenue, causing some softness of enrollment, and resulting in an extremely low freshmen matriculation ratio.”
Still, the revised positive outlook is important in that reflects the substantial increase in financial resources and operational flexibility that is expected as a result of the Manhattan campus.
“A clear strategic plan for the funds and university as a whole,” Moody’s said in its statement, “and sound investment management will be important factors as the university integrates the new funds into its balance sheet.”