Moody’s Investors Service last week downgraded Northwest Missouri State University’s rating to A3 from A2 due to fiscal pressures on the school. The action affects $85.7 million of debt.
“The rating action reflects Moody’s concerns about the university’s limited liquidity, debt structure risks, thin debt service coverage from pledged revenues, and limited financial flexibility due to a tuition freeze for in-state undergraduate students at the same time that state support is being reduced,” analysts wrote.
NMSU had just $3.5 million of unrestricted monthly liquidity, which covered less than 14 days of cash expenses at the end of 2009. Its financial flexibility is constrained as public universities in Missouri agreed to freeze tuition for in-state residents in exchange for a more moderate cut in state operating support. Credit strengths include enrollment growth, strong demand, state support and the dedication of student fees for debt service.