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Moody’s Upgrades UNCW’s Outlook

By Jenny Callison, posted Jan 13, 2014
The University of North Carolina Wilmington’s growth and fiscal health has earned it an unusually favorable designation in the U.S. higher education sector from Moody’s Investor Service.

The university announced Monday that it has been given a revised outlook from Moody’s, rising from stable to positive. This designation is in contrast to the rating agency’s overall negative outlook for the sector in its recently released “2014 Outlook for U.S. Higher Education.”

UNCW’s news release stated that the upgrade followed a recent meeting of Moody’s representatives with the university’s leadership team. The review was a normal follow-up that Moody’s performs after an institution takes on debt through the sale of bonds.

The news release added that Moody’s cited UNCW’s “sustained enrollment growth, improved financial resources and favorable operating performance” as factors in earning the positive rating. Moody’s also affirmed its existing A1 underlying rating on UNCW’s general revenue bonds and an A2 rating on the university’s certificates of participation.

Moody’s evaluation was based in part on UNCW’s student demand, revenue sources and debt information, the release stated.

“This is a strong affirmation of our financial leadership team and our commitment to being a leader in higher education financial management in these transitional times,” UNCW chancellor Gary Miller said in the release.

According to the release, Moody’s bases its outlook assessment on several factors, including leadership management, vision, enrollment growth and value proposition. UNCW’s enrollment has grown 16 percent since 2009. This past fall, the university welcomed the largest class in the school’s history. The release also stated that UNCW’s operating performance has improved with operating cash flow at 12.5 percent in the 2013 fiscal year compared with 6.9 percent in the 2009 fiscal year.

In its report published Jan. 16, 2013 on higher education credit worthiness, Moody’s revised its outlook for the entire U.S. sector from stable to negative. That view was reinforced in November, when the agency published its forecast for 2014.

“Heightened competition for government funds, donors and students combined with pressure to increase compensation and invest in programs and facilities will result in continued deterioration of financial performance,” Moody’s vice president-senior analyst Eva Bogaty wrote in November. “Although higher education institutions have shown willingness and ability to adapt to weak economic conditions, the uncertain funding and regulatory environments will overshadow the sector’s strengths in the near term.”

Charles Maimone, UNCW’s vice chancellor of business affairs, said Monday that public institutions are challenged because of flat or decreasing state support and because of declining federal contract and grant funding.

“That’s why universities have to be certain they are working to diversify their income sources and are managing their expenses very well,” he said. “That’s what is so encouraging about this rating: showing the credit worthiness of our institution. The outlook has improved for UNCW.

“This is also affirmation of our commitment to effective resource management; we take that obligation to our students, the public and investors very seriously and are gratified to see it recognized in this way,” he said. “We value Moody’s position, and we expect that these same determining elements will continue to strengthen in the coming 18-24 months.

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