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S&P upgrades Vanderbilt University’s credit rating to AA+

Nov. 16, 2017, 9:05 AM

Standard and Poor’s on Tuesday revised its long-term credit rating for Vanderbilt University to AA+, the global credit rating service’s second-highest rating, up from AA. Vanderbilt’s outlook is stable. The upgrade reflects the institution’s overall financial health following the April 2016 reorganization of the university and Vanderbilt University Medical Center. S&P also affirmed its A-1+ short-term rating on Vanderbilt’s commercial paper programs.

Of the 267 S&P-rated universities, only 12 hold the highest rating of AAA, and 12, including Vanderbilt, are AA+. Vanderbilt joins Brown, Dartmouth, Duke and the University of Pennsylvania on the AA+ rating tier. All else equal, a higher credit rating affords Vanderbilt access to broader pools of capital at lower rates, which thereby frees up precious financial resources for investments in students and faculty.

“This rating is an affirmation of the university’s unified focus on our mission and priorities. I want to offer a heartfelt thanks to Vice Chancellor for Finance Brett Sweet and his amazing team for their efforts to steadily improve the university’s credit rating since the reorganization of VUMC a little more than a year and a half ago,” Chancellor Nicholas S. Zeppos said. “So much of their work—and the work of countless others—burnishes the Vanderbilt reputation and brand and allows us to go big and bold in all that we endeavor to do.”

The report cited Vanderbilt’s extremely strong enterprise profile, based on the university’s market position as well as its impressive fundraising track record. It also cited Vanderbilt’s very strong financial profile, which incorporates the university’s healthy endowment and history of positive full-accrual operating results, among other factors.

Also noted in the report was Vanderbilt’s strong student demand. Students are attracted to the Vanderbilt experience, with the applicant pool growing by 144 percent over the past decade. Of the 31,462 students who applied to Vanderbilt this year, 10.9 percent were admitted.

“The stable outlook reflects Vanderbilt’s successful transition of its operations and cash flow, strong balance-sheet metrics relative to those of its peers, and solid demand profile,” the S&P report said.

In issuing the news, S&P noted that the university is potentially positioned for a higher rating in the future.

Read the full report on the university’s Treasury website.

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