Standard & Poor’s yesterday upgraded to BBB-plus from BBB $503.9 million of University of Medicine and Dentistry of New Jersey debt that is backed by unlimited student fees. The outlook is stable.
The stand-alone credit profile remains BBB. The school has roughly $938.4 million of long-term and capital-lease debt outstanding.
Standard & Poor’s does not rate UMDNJ’s Series 2009B bonds totaling $258 million. Standard & Poor’s raised its rating on UMDNJ’s student fee bonds in light of its government-related entities criteria. Each year, the school receives annual appropriations from the Legislature. Lawmakers increased that allocation in fiscal 2010 by $31 million.
“In accordance with our criteria for government-related entities, we based our view of a 'moderate’ likelihood of extraordinary government support on our assessment of UMDNJ’s 'limited’ link with the state of New Jersey [which Standard & Poor’s rates AA with a stable outlook] given the state’s history of regular operating support, periodic capital support for academic facilities, no recent history of extraordinary support, and the fact that any extraordinary support would likely require legislative approval, which could affect the timeliness of providing such support,” according to a Standard & Poor’s report.
“In addition, we based our assessment on UMDNJ’s 'important’ role in the state’s economy compared with that of other state GREs, given its position as the state’s sole provider of medical and dental education with an indirect contribution to economic development in the state,” the agency said.
During the 2007-2009 school year, UMDNJ employed roughly 15,261 full-time and part-time faculty and staff, according to its Web site. The institution oversees eight schools, and has four teaching hospitals and three university hospitals. Total 2007 student enrollment was 5,696.
Student demand remains strong. Total applications among the various schools was up in the 2008-2009 school year, with matriculation rates at more than 60%, according to Standard & Poor’s.
Moody’s Investors Service rates UMDNJ Baa2 with a negative outlook, including the student fee bonds. Fitch Ratings rates the Series 2009B bonds BBB-plus with a stable outlook. Fitch does not rate the school’s prior debt.
