Standard & Poor's raised its long-term and underlying ratings on Indiana University to AA-plus from AA.

The rating agency also assigned a AA-plus long-term rating to the university's upcoming $17 million of consolidated revenue bonds to be issued early next year. The upgrade affects the school's student fee revenue bonds, consolidated revenue bonds, certificates of participation, and auxiliary debt, analysts said.

"The raised rating reflects our view of Indiana University's fundamental institutional credit strengths, including its demand position as a flagship university, revenue diversity, strong management team with good fiscal planning and policies in place, consistently positive financial operations on a full-accrual basis, and manageable debt burden," analyst Nick Waugh wrote in a report on the upgrade. "We believe that because of these factors, the university is well positioned to manage through what is expected to be a constrained state funding environment."

The university plans to use proceeds from the upcoming borrowing to build a parking garage. The project is part of a larger capital plan, which Standard & Poor's warned could weaken IU's financial position.

The 2011 bonds are backed by several IU funds, including certain unrestricted operating fund balances, auxiliary and other fund balances, and quasi-endowments held by the Indiana University Foundation, the rating agency said.

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