Moody’s Investors Service last week downgraded its underlying rating on Northeast Ohio Medical University to Baa1 from A2. It also downgraded 2012 student housing revenue bonds to Baa3 from Baa1.
Moody’s in October downgraded the university to A2 from A1 and placed the rating under review for a possible further downgrade. The newest downgrade concludes the rating review. The outlook is now negative. The move affects $79 million of outstanding debt.
NEOMED is a public medical university in northeast Ohio. It substantially increased its debt last year when it borrowed to build a health and medical education center. Other projects include a new academic research building, a 339-bed housing complex, and renovations of roads and parking.
Last year’s borrowing “increased its risk profile relative to its balance-sheet resources and revenues and prior debt commitments,” the ratings agency said.
The university’s revenue and cash-flow projects are based on expected increases in enrollment, philanthropy, research and state appropriations; revenue streams that could face challenges from the economy, and other factors. The university’s strengths include its niche market position and strong operating performance, analysts said.