Moody’s Investors Service Monday downgraded to A2 from A1 $79 million of debt issued by Northeast Ohio Medical University, and placed the rating under review for further possible downgrade.

The downgrade comes as the university plans to issue $88 million of bonds to build a health and medical education center, according to the credit rating agency.

“The issuance would severely leverage the university against its small operating base and limited balance sheet cushion, as well as substantially increase debt service payments,” Moody’s said in the downgrade report.

The university’s oversight of its large capital projects also challenges the credit, according to Moody’s analysts.

In addition to the new health center, projects include a new academic research building, student housing, and a reconfiguration of campus grounds.

The university plans to lease 75,000 square feet of the new center to hospital partners to help offset debt payments, but so far no lease has been signed, analysts said.

“Inability of the university to substantially lease up the building or secure favorable pricing or terms that mitigate risk of the increase in debt service payments could further pressure the rating downward,” the downgrade report said.

Moody’s said it expects to resolve the outlook within the next 90 days.

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