A merger between Philadelphia University and Thomas Jefferson University will have no immediate credit impact on either of the private colleges, according to Moody’s Investors Service.
The two schools located in Philadelphia completed a combination on July 1 with Thomas Jefferson taking on the name of the new integrated university. Moody’s analyst Diane Viacava said in a report released late Tuesday that the merged university will not instantly influence Philadelphia University's $47 million of rated debt issued through the Pennsylvania Higher Educational Facilities Authority. Moody’s rates Philadelphia University bonds at Baa2 with a stable outlook.
“At this time there is no change in the security pledge or debt structure for Philadelphia University's debt, although TJU expects to refund the debt when market conditions permit under its own master trust indenture,” said Viacava.
TJU’s credit conditions are also not impacted by the combination, according to Viacava. She said the addition of Philadelphia University’s $97 million of revenue along with $75 million of cash and investments will “minimally affect TJU's consolidated financial profile.” The university, which Moody’s rates at A2 with a stable outlook, will have $3.7 billion of pro forma operating revenues when factoring in its clinical arm of Aria Health and Abington Health.
“Long-term risks include managing programs across two campuses as it transforms to a more comprehensive university from a health-based academic institution,” said Viacava.
The combination creates a university with 7,500 student enrollment on the two main campuses. TJU is comprised now of nine colleges and three schools from the two universities. The merger will also result in TJU forming the Philadelphia University Honors Institute and Philadelphia University Design Institute.