UNIVERSITY PARK, Pa. -- Penn State officials have learned that the University has maintained its longterm rating of Aa1 from Moody's Investors Service and has been removed from the company's "Watchlist for Possible Downgrade," where it was placed on Nov. 11, 2011.
"Penn State’s Aa1 rating is the second-highest category of Moody’s 21 possible ratings and reflects the University’s top financial position in U.S. public higher education," said Joseph Doncsecz, the University's associate vice president for finance and corporate controller. "This rating is on par with peer research universities and reflects our position as a leading public university with many fundamental strengths."
Moody's bond credit rating business provides financial research on an organization's general creditworthiness. A triple A (Aaa) rating is the highest credit quality that can be assigned. Also as part of the rating action taken in regard to Penn State, Moody's listed the University outlook as "negative” within the Aa1 category.
Doncsecz explained that the negative outlook is due to “ongoing uncertainty” as to emerging risks that Moody's outlines in their report. Those uncertainties include direct litigation costs as well as possible indirect effects on student demand and philanthropy stemming from the sexual abuse charges involving retired assistant coach Jerry Sandusky.
Moody's indicated in their assessment that the most likely outcome would be that the university will settle a manageable number of claims by victims with no substantial financial weakening and that they will reassess the University’s credit profile over the next 12 months.