NEW YORK - Standard & Poor's Ratings Services said it revised its outlook to positive from stable and affirmed its A-plus long-term rating and underlying rating (SPUR) on University of North Dakota's (UND) debt issued by North Dakota State Board of Higher Education.
"The outlook revision reflects our view of another year of healthy operating performance, enrollment growth in recent years, and continued growth in financial resource ratios relative to debt that are consistent with a higher rating category," said Standard & Poor's credit analyst Shivani Singh. "We understand that the university plans to issue about $14 million of additional debt within the next two to three years, which we believe the university has capacity to absorb, even at a higher rating."
Factors supporting the rating reflect the university's: flagship position in North Dakota (AA+/Positive issuer credit rating) and increasing state funding in recent years; solid demand despite declining demographic trends in North Dakota; stable financial operations with historically adequate debt service coverage; manageable maximum annual debt service burden that equals an estimated 3.6% (including capital leases) of fiscal 2011 operating expenses, and fairly limited debt plans; and comprehensive course offerings.
Partially offsetting these strengths is: UND's relatively low financial resource ratios relative to the medians for the rating category; and flat to declining demographics of graduating high school students in North Dakota, offset by a growing percentage of out-of-state and international students (55% of total enrollment in fall 2011).
As of June 30, 2011, university debt totaled roughly $107 million, reflecting $67.1 million in revenue bonds and $39.8 million in capital leases.
