NEW YORK - Moody's Investors Service said it has downgraded Arizona State University's (ASU) system revenue bonds to A1 from Aa3 and assigned an A1 rating to the $177 million of fixed-rate Series 2010 system revenue bonds.
The series 2010 bonds will be issued in two series, $165.9 million of series 2010A taxable Build America Bonds and $11.2 million of series 2010B tax-exempt bonds.
Moody’s said it has lowered the ratings on the university's outstanding debt by one notch, including ratings on certificates of participation as well as underlying ratings on other lease revenue bonds issued by various component units of the university.
The rating action is driven by a steady increase in both operating and balance sheet leverage, thin operating performance, cuts in state funding, and thin liquidity relative to a very large expense base and significant debt service responsibilities.
The outlook remains stable at the lower rating level reflecting the university's healthy market position and expectation that management will continue to focus on long-term growth of net tuition revenue and containment of expenses.
