Moody recognizes IU’s financial health with highest rating

Moody’s Investors Service has rated IU’s financial health as one of the strongest public institutions across the country, giving the University the highest credit rating possible — Aaa.

“Only seven universities were given this credit rating, so IU feels very honored,” University Treasurer MaryFrances McCourt said. “The credit rating indicates Indiana University has extremely strong financial health and will result in reduced financial costs in the future.”

The credit rating will reduce the cost of managing IU’s more than $800 million in outstanding debt, which officials in an IU press release said means savings for the University as well as the student body.

“This rating indirectly affects students because it lowers University costs, which in turn will result in lower tuition increases in the future,” McCourt said. “Also, having a high credit rating attracts investors to Indiana University because it shows IU is a safe place to invest in. With the financial market across the country and Europe like it is, this makes IU especially attractive.”

IU’s increased rating from Aa1 to Aaa came after Moody’s recently changed its comparable rating scale for public and private debt.

In the press release, the Board of Trustees attributed the University’s high rating to its policy of transparency when working with Moody’s and making sure the agency fully understands its financial goals and strategies.

Moody’s takes into account an organization’s overall financial health when assigning credit ratings.

The agency looked at IU’s balance, how money has been used and how the management team dealt with the recent financial crisis, as well as the overall track record and level of consistency shown in the past.

Other public institutions given the Aaa credit rating include the University of Michigan, the University of Texas, the University of Virginia, the University of North Carolina, the University of Washington and Purdue University.

“We are extremely pleased to be among a select group of universities that have received Moody’s highest credit rating,” IU President Michael McRobbie said in a press release last week. “This rating will allow Indiana University to benefit from very low financing costs. It is also testament to our continuing fiscal discipline and efforts toward greater efficiency in how we use our resources, which are ensuring our flexibility and stability in these difficult economic times and allowing us to build upon the great progress we have made in recent years.”

– By Hannah Spencer