CU bonds given significant rating upgrade

The University of Colorado’s bond rating has been upgraded to Aa1 by Moody’s Investors Service.

The rating boost indicates to investors a stable outlook for CU’s existing and future bonds.

“The upgrade to CU’s rating not only demonstrates confidence in how we operate the university, but also will allow us to realize millions of dollars in interest cost savings in the coming years,” said CU President Bruce D. Benson. “Our strategies for how we approach our key revenue streams, as well as our focus on efficiency in our operations, are reflected in this upgrade.”

In its credit opinion, Moody’s cited CU’s “demonstrated success and ongoing momentum of strategic revenue and financial reserve growth, in addition to improving leverage as its pace of debt financed capital investment tapers down.”

Increased private support, an impressive research profile, excellent strategic positioning and ongoing tuition revenue also were cited by Moody’s as among the reasons for the upgrade to Aa1. Low state funding for operations and capital remains a caveat that Moody’s notes to investors.

Additionally, Fitch Rating Service confirmed its existing AA+ rating of CU. At this point, there is only one rating category, Aaa/AAA, for each rating agency that is higher than CU’s Aa1/AA+.

“The stable outlook reflects our expectations that CU will continue to record steady student demand and growth in student charges, strong research activity and flexibility to adjust to federal funding challenges, and substantial gift support,” Moody’s writes in the opinion. “CU’s rating, which is now one rating grade above the state’s Certificates of Participation rating, reflects the university’s favorable revenue growth and diversity to offset state funding limitations.”