Univ. of Pennsylvania Outlook Raised to Positive

Moody's Investors Service revised its outlook on the University of Pennsylvania's Aa2 rating to positive from stable Nov. 20 on expectations that the Ivy League school will continue its momentum in student enrollment, donor support and building flexible reserves.

The ratings agency notes that the Philadelphia college grew operating revenues between 2010 and 2014 at an average of 4.8% and receives gifts averaging $410 million per year.

Highlighting Penn's enrollment strengths was a 65.2% yield rate for the fall of 2014 on accepted applicants. Only 10.4% of freshmen applicants were admitted. Overall the university enrolled 22,563 full-time equivalent students for the fall 2014 semester with a net tuition per student at $36,423, according to Moody's.

Penn has nearly $12 billion in total cash and investments with its reserves offering "considerable flexibility," Moody's said. Its monthly liquidity is at $5.6 billion, up from $3 billion in 2010.

One of the fiscal challenges facing Penn that Moody's cites is patient care revenues comprising 55% of the university's consolidated operating base, which could be uncertain going forward due to healthcare reforms. The college also has "ambitious" capital plans that will likely limit resource growth and increase debt.

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