New York University received a one-notch rating boost from Moody’s Investors Service late Monday ahead of planned $652 million revenue bond sale.

Moody’s upgraded NYU bonds to Aa2 from Aa3 with a stable outlook citing the large private college’s strong financial support from revenue and donors. NYU is slated to issue $492 million in Series 2017A tax-exempt revenue bonds and $222.6 million of series 2017B taxable bonds on May 9 through the Dormitory Authority of the State of New York. Proceeds will fund capital improvements and refund prior debt issued by DASNY and the New York City Industrial Development Agency.

New York University
Bloomberg News

“The upgrade acknowledges NYU's ongoing momentum in strategic revenue growth, global reach and prospects for ongoing gains in total wealth aided by donor support,” said Moody’s analyst Dennis Gebhardt in Monday's report. “New York University’s Aa2 also reflects its increasingly global brand as a comprehensive research university with geographically diversified locations, robust revenue growth and effective risk management to mitigate its complex business model.”

The upgrade affects about $3.2 billion of outstanding revenue bonds. The outlook is stable. University officials said following the Moody’s upgrade that the upcoming bond sale will be used for renovations and upgrades to NYU School of Medicine’s new science building, the Tandon School of Engineering and the new home for its College of Global Public Health.

Gebhardt noted that NYU reported $8.6 billion of operating revenue in the 2016 fiscal year and also holds real estate holdings with a book value of $5.3 billion. Strong clinical demand has also contributed to a sound operating performance at NYU Hospitals Center, which Moody’s rates at A3 with a stable outlook for its $1.8 billion of rated debt.

NYU’s full-time enrollment totals nearly 45,000 on campuses in Manhattan, Brooklyn, Abu Dhabi, and Shanghai. The university was positioned at the end of 2016 to operate for 147 days based on unrestricted cash and investments, according to Gebhardt.

“New York University's relatively rapid transformation to a globally competitive research university reflects the successful alignment of its locations, programs, donor support and branding,” said Gebhardt. “Ongoing evaluation of and investments in academic offerings, student services and facilities contribute to NYU's excellent strategic positioning.”

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.