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Standard & Poor’s Global Ratings affirms UM System’s AA+ credit rating and returns outlook to stable

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Kelly Wiemann

March 01, 2017

Second positive credit rating report in eight months to highlight the UM System’s effective financial management.

COLUMBIA, Mo. – Standard & Poor’s Global Ratings, one of the nation’s premier credit rating services, today announced an affirmation of the University of Missouri System’s high-grade AA+ credit rating, and returned the outlook for the system’s overall credit rating to stable.  S&P’s opinion came after analysts held in-depth briefings with university leaders about the future of the institution.

“S&P’s affirmation accurately reflects the hard work of our campuses and health system to serve the citizens of Missouri through research, teaching and outreach and is welcome news,” President Choi said. “My predecessor, Interim President Michael Middleton, and the Board of Curators deserve much credit as their leadership secured the stability of the UM System and enabled the university to maintain its solid financial footing.  We plan to build on this momentum to create a stronger and more resilient institution.”

This AA+ rating, the second highest long-term credit rating an institution can receive from S&P, will keep the UM System among the top ten percent of public higher education institutions rated by the agency. Today’s rating follows the recent July rating by Moody’s Investors Service, another leading credit rating agency, which reaffirmed its high-grade rating of Aa1 also with a stable outlook. These two ratings combined keeps the UM System among an elite group of aspirant institutions. Less than 10% of the public institutions rated fall within both rating services’ top two rating categories.

“We are very pleased with the detailed review and outcome that S&P analysts presented in this updated outlook on the UM System,” UM System Interim Vice President for Finance and Chief Financial Officer Ryan Rapp said. “The shift from a negative to stable outlook by S&P provides a third-party validation on the continued strength and soundness of our financial stewardship as well as our ongoing strategic investments in new infrastructure to grow research, enhance student learning and engagement and improve health care delivery to our patients.” 

In its report, S&P cited the UM System’s recent and expected strong, ongoing operating performance, fundraising and financial profile compared to its peers. The credit rating agency assessed the UM System’s enterprise profile as solid and the stable outlook is predicated on the expectation that during the next two years the UM System will continue to provide positive operating results on a full-accrual basis and maintain unrestricted net assets relative to debt at or near current levels.

UM System strengths outlined in the analysis include:

  • The position as Missouri’s land-grant institution and history of consistent state operational support;
  • Historically stable-to-growing enrollment across all campuses;
  • A good demand profile with sound student retention and above-average student quality;
  • A history of balanced-to-positive operations on a full-accrual basis; and
  • Reasonable maximum annual debt service burden.

S&P’s media release can be found here: https://www.umsystem.edu/media/ur/20170301-ums-sp-press-release.pdf

S&P’s full report can be found here: https://www.umsystem.edu/media/ur/20170301-ums-sp-press-release-2.pdf

 

 

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