Moody's Investors Service said it has downgraded the long term debt rating on the University of Tulsa's Series 1996A, 2006, 2009 and 2011 tuition revenue bonds and Series 2006 student housing bonds to A3 from A2.
The outlook is negative at the lower rating level.
The downgrade to A3 reflects TU's decline in operating performance and cash flow operations with deficit operations (per Moody's calculation) in fiscal year (FY) 2011 and FY 2012, weak debt service coverage, extremely thin unrestricted liquidity and heavy reliance on investment income, as well as a more leveraged operating and balance sheet position relative to its peers in the A2 rating category.
Offsetting strengths are the university's stable student market position, favorable gift revenue and dedicated trust fund resources contributing to a strong overall financial resource base.
The negative outlook reflects the university's exposure to competitive undergraduate market challenges, rising tuition discount, volatile market returns on sizeable investments, and continued investment in new programs and faculty increases to meet student enrollment needs.
