ISU Credit Rating Falls With State Budget Failure | WGLT

ISU Credit Rating Falls With State Budget Failure

Jun 14, 2017

ISU continues to show more financial strength than the state government and most other state universities, according to bond rating agencies.
Credit Staff / WGLT

In the wake of another spring legislative session that failed to produce a state budget, two ratings agencies have downgraded state universities including ISU.

Standard and Poor's recently chose not to downgrade ISU, but S and P has a rule that no public university can be more than three grades above the rating for its host state. And so when S and P downgraded Illinois, last week it also gave a technical downgrade to ISU to A minus.

Meanwhile, Moody's downgraded ISU in a couple of categories; to B-AA2 for Auxiliary Facilities Revenue bonds, and B-AA3 for Certificates of Participation.

Auxiliary Facilities Bonds have independent revenue associated with them, such as student fees. The more general debt instrument for ISU called certificates of participation is lower because it is tied to general revenue, some of which comes from the state.   

University Spokesman Eric Jome noted ISU is not on a credit watch, which triggers more frequent reviews of credit worthiness. Both ratings agencies do have a negative outlook for ISU.

ISU debt ratings remain above those of all other public universities in the state except for the flagship U of I.

"The new ratings are not a negative reflection of anything ISU is doing, but a recognition of the atmosphere in the state," said Jome.

Jome said ISU's ratings remain solidly investment grade.