As the Colorado State University System prepares to issue $220 million in bonds to construct a new stadium on its Fort Collins campus, both Standard and Poor’s Rating Services and Moody’s Investors Service affirmed the financial strength of the three-campus system by maintaining the system’s underlying bond ratings.
Moody’s upheld the System’s “Aa3” rating, and S&P continued its “A+” rating for CSU System debt. CSU also maintained an S&P rating of “AA-“ and a Moody’s rating of “Aa2” for bonds issued with the backing of the Colorado State Intercept Program. CSU will not use state intercept-backed bonds for the stadium project.
“As CSU makes progress on its long-term strategy to complete significant campus infrastructure investments, the continuation of the System’s investment-grade bond ratings indicate real confidence in CSU leadership and the institution’s financial health,” said Richard Schweigert, CSU System chief financial officer. “Given advantageous conditions in the bond market, these ratings will result in favorable interest rates as we finance a series of projects that are needed to support growth on the Fort Collins campus.”
After bonds are issued to finance the stadium, CSU is planning to issue an additional round of bonds totaling approximately $160 million for the construction of a new medical center, a biology building, a parking structure, a parking lot and the relocation of the Plant Environmental Research Center.
In addition to maintaining the System’s bond rating, Moody’s continued to offer a stable outlook for that rating based on an “expectation that the university will successfully manage the construction risk” of the multiple projects and in anticipation that the university leadership will provide “sustained balanced operating performance.”
In the event of stadium revenue projections falling “moderately short,” Moody’s indicated that their rating was based on the institution’s “demonstrated operational flexibility” and “long-term financial strength.”
While S&P maintained the System’s strong, investment-grade bond rating based on “strong enterprise and financial profile” of the CSU System, it warned of a potential ratings change in the future if additional borrowing were to “exert greater pressure on financial resources.”
“The investment-grade ratings from Moody’s and S&P secured by the CSU System represent a positive external endorsement on the long-term financial strength of the university,” said Sanjay Ramchander, a professor of finance and associate dean of CSU’s College of Business. “In particular, maintenance of Aa3 underlying rating by Moody’s and an A+ rating by S&P in the presence of additional borrowing is also consistent with the rating agencies’ view of providing a balanced outlook on the System’s financial performance and the ability of the university to manage the operational risk of the multiple capital projects that are underway.”