Standard & Poor’s has revised its outlook on outstanding University of Southern California debt to stable from negative because the school has maintained solid finances.
“The outlook revision is based on our view of the university’s maintenance of strong operating performance despite the acquisition of two hospitals from Tenet in 2009 and the limited negative effect the hospitals have had on overall university financial performance,” said Standard & Poor’s analyst Jessica Matsumori.
Matsumori said the negative impact of the hospitals should grow smaller with time as they become stronger.
Standard & Poor’s also affirmed the AA-plus long-term and underlying rating on the debt issued through the California Educational Facilities Authority and California Infrastructure and Economic Development Bank.
The agency said the rating reflected the size of USC’s student population as well as its status as the largest private university in California, with a headcount of more than 36,000 for fall 2010. It also said the school’s history of strong operating performance and impressive fundraising supported the rating.
But Standard & Poor’s noted that the university had low financial resources for the rating category, with fiscal 2010 expendable resources of $2.2 billion that is equal to only 73% of operating expenses and 238% of debt.