S&P upgrades Vanderbilt to highest possible AAA bond rating

S&P Global Ratings has raised its long-term rating on Vanderbilt University’s bonds to AAA, the highest possible rating. Vanderbilt joins only 10 other universities and colleges that currently have a AAA rating from S&P.

In its report released Nov. 22, S&P attributed Vanderbilt’s higher rating to several factors, including the strength of the university’s leadership team and the continued growth of its endowment, which totaled $10.2 billion as of June 30, 2022. Also cited were Vanderbilt’s history of successful fundraising and its positive financial operations through the COVID-19 pandemic, highlighted by a $234 million surplus in fiscal year 2022.

Another key driver mentioned in the report is student quality. S&P noted the university’s increased application volume and student demand, with an undergraduate selectivity rate of 6.7 percent.

“The stable outlook reflects our expectation that VU will maintain its exceptional market position and robust operating margins,” the report said, “and will continue to improve financial resources compared with operating expenses and pro forma debt.”

In addition, S&P affirmed its “A-1+” short-term rating on Vanderbilt’s commercial paper programs. “The short-term rating reflects our view of VU’s adequate liquidity, sufficiency of the pledged assets, and unsecured GO [general obligation] pledge,” the report said.

Vanderbilt is rated AAA and Aa1 by Fitch and Moody’s, the other two major credit rating agencies, respectively.