Moody's Investors Service said it has downgraded its ratings on New Mexico State University's revenue bonds to Aa3 from Aa2.
The outlook is stable.
The downgrade reflects the university's weakened operating performance and competitive enrollment pressures, leading to limited prospects for financial resource growth in line with Aa2-rated public universities.
The Aa3 rating incorporates NMSU's role as a large land grant university with four community colleges, and a state-wide agricultural extension service presence. The rating also incorporates healthy state support, a competitive tuition price advantage, and moderate financial leverage.
Credit challenges include weak operating performance driven by declining enrollment across all campuses, cuts in sponsored research and state support, rising expenses, and transitions in senior management over the last several years.
The stable outlook reflects expectations that under the stewardship of the recently appointed president and provost, and guided by a measurable strategic plan, NMSU will take the steps necessary to operate in equilibrium while maintaining or gradually building flexible reserves.
