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Vanderbilt University gets AAA bond rating from Fitch

by Oct. 19, 2016, 2:13 PM

Vanderbilt University’s bond rating has been upgraded to AAA—the highest level—by a leading credit agency.

Fitch Group assigned its top rating to the university’s upcoming issue of $141 million in taxable revenue bonds. Moody’s and Standard and Poor’s affirmed their ratings of Aa2 and AA, respectively, with both indicating a positive outlook.

The bond series is to help fund on-campus student housing, expanding the university’s residential college system to accommodate more upperclass students.

The April 2016 reorganization of Vanderbilt University and Vanderbilt University Medical Center into separate financial entities was cited by all three agencies as the reason for the positive changes.

“The sale of medical assets and activities to VUMC has dramatically decreased VU’s leverage while reducing its exposure to inherently riskier health care operations,” the Fitch report said. “The ‘AAA’ rating reflects VU’s superior balance sheet resources, excellent reputation and market position, solid operating results, and very low debt burden.”

In giving its Aa2 rating, Moody’s cited Vanderbilt’s “excellent student market, sponsored research prowess, considerable wealth, and prospects for ongoing donor support.”

Fitch and Moody’s affirmed their ratings for Vanderbilt’s short-term commercial paper program, with Fitch at F1+ and Moody’s at P-1.

These reports continue the favorable trend that began in December 2015, when Moody’s revised the university’s outlook upward to positive. S&P made a similar report in August 2016.

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