Despite risks to its finances and reputation, Penn State University will endure the “trauma and potential credit stress” from the child sex-abuse conviction of former assistant football coach Jerry Sandusky and expected claims, said Janney Capital Markets.
Moody’s Investors Service rates Penn State Aa1 with a negative outlook, while Standard & Poor’s assigns a AA rating and a stable outlook.
Underlying credit questions surfaced again after Sandusky’s June 22 conviction on 45 of 48 charges.
Student applications were up for fiscal 2012, according to Janney, while research and private fundraising reached record levels.
The negative outlook by Moody’s “reflects uncertainty of the near-to-medium term more than anything,” Janney added.