Moody's Investors Service said it has assigned an A1 rating to Michigan Technological University's $13.36 million general revenue and refunding bonds, Series 2013A, which will be issued by the Board of Control of Michigan Technological University, and downgraded the rating on outstanding bonds to A1 from Aa3 and revised the outlook to stable from negative.
The downgrade to A1 is driven by consistently unfavorable operations, weak cash flows, and thin balance sheet relative to rated peers, that are not expected to improve materially over at least the medium-term.
The A1 rating also reflects the university's solid market position as a public university with a strong regional student draw, located in the Upper Peninsula with a market niche in engineering and applied sciences, ongoing challenges to enrollment, and weak demographic projections for high school graduates in the state of Michigan.
Revision of the outlook to stable from negative considers the expectation that both operations and financial resources will not change materially over the next few years as enrollment stabilizes or grows due to several initiatives to expand program offerings and expand recruitment of students in concert with long-range enrollment growth targets, and with continued state support at stable levels.
