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Moody’s Investors Service affirms UM System’s credit rating and outlook as stable in update

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Kelly Wiemann

July 18, 2016

Report cites prudent financial management, increased profitability of health care system, to support outlook as stable

COLUMBIA, Mo. – Moody’s Investors Service, one of the nation’s premier credit rating services, announced an affirmation of the University of Missouri System’s high-grade Aa1 credit rating, pronouncing the outlook for the system’s overall credit rating as stable.  Moody’s opinion came after analysts traveled to Missouri to visit with university leadership to assess the outlook from a first-hand perspective.

Aa1 is the second highest long-term credit rating an institution can receive. Less than 10% of the public institutions rated by Moody’s fall within their top two rating categories.

In its report, Moody’s cited the UM System’s large scale as a multi-campus system and importance in delivering educational and medical services in the Aaa-rated State of Missouri, to underpin its Aa1 rating. A history of prudent financial management, as demonstrated by nimble expense reductions and the ability to curtail long-term liabilities, combined with the improved profitability of the University’s health care system, was also found by Moody’s to support its Aa1 rating.

“This affirmation and outlook is welcome news and accurately reflects the hard work of so many on our campuses and our health system to serve the citizens of Missouri in all they do,” UM System Interim President Michael Middleton said. “Moody’s noted appropriately that the budget increase in state appropriations from the General Assembly and Governor was a significant factor in this rating and outlook. We are extremely grateful for the state’s continued efforts to fund our institution and remain confident in both our partnership with the state and our ability to serve the state and educate the next generation of students.”

UM System strengths outlined in the analysis include:

  • The depth and breadth of the entire system with four campuses and a health system providing valuable services unmatched statewide;
  • Strong liquidity to meet debt service needs;
  • Proactive efforts by management and the Board to reduce long-term liabilities with recent changes to retiree medical benefits;
  • Prudent financial management, including willingness to adjust expenses accordingly; and
  • A strong, self-supporting, profitable health enterprise with added capacity and affiliations to increase cash flow.

“We are very pleased with the in-depth review and outcome that Moody’s analysts presented in this updated outlook on the UM System,” UM System Vice President for Finance and Chief Financial Officer Brian Burnett said. “A great deal of credit is due to our faculty, staff and leaders who continue to serve our students and state and are making difficult decisions in a challenging fiscal environment.”

Moody's Investors Service is a leading provider of credit ratings, research, and risk analysis. Moody's commitment and expertise contributes to transparent and integrated financial markets. The firm's ratings and analysis track debt covering more than 120 sovereign nations, approximately 11,000 corporate issuers, 21,000 public finance issuers, and 72,000 structured finance obligations. Moody's Investors Service is a subsidiary of Moody's Corporation (NYSE: MCO), which reported revenue of $3.5 billion in 2015, employs approximately 10,800 people worldwide and maintains a presence in 36 countries. Further information is available at www.moodys.com.

Moody’s media release can be found here: https://uminfopoint.umsystem.edu/media/ur/Moody/Moodys_rating_action.pdf

The full report can be found here: https://uminfopoint.umsystem.edu/media/ur/Moody/Moodys_final_rating_report.pdf

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