January 18, 2019

SVSU earns high praise for its fiscal health from top credit rating service

Saginaw Valley State University works hard to maintain a high-quality education at relatively low tuition rates for its students. That commitment recently resulted in a top credit rating service praising SVSU for its fiscal responsibility and strength.

New York City-based Moody’s Investors Service in a Jan. 14 report announced an A1 rating for SVSU’s $102 million in existing debt, citing the university’s “prudent fiscal discipline.”

SVSU’s high rating is especially impressive considering Moody’s less-optimistic analysis and forecast for the higher education industry as a whole, said James G. Muladore, executive vice president for administration and business affairs.

“They have issued a negative outlook for higher education based on demographic and enrollment trends and what is seen as declining net tuition revenue,” he said. “We’re pleased we have this positive affirmation as well as a stable outlook for the future. We’re fortunate we’re in a relatively good place at this time.”

In its recent report, Moody’s stated “the A1 rating reflects SVSU's consistently well managed operations that continue to generate very good cash flow and debt service coverage.”

The positive rating — along with a similarly high A credit rating recently issued by New York City-based Standard and Poor’s Financial Services — will allow SVSU to seek low interest rates for potential future projects, Muladore said. The $102 million in existing debt largely represents campus construction projects that supported SVSU’s academic programs and student housing in recent decades.

Muladore said he expects SVSU will remain on solid footing relating to its debt, which he projects will fall to $70 million — a 31 percent reduction — by 2023.

He said the university’s fiscal strength was in part the result of following conservative budgeting practices over the years.

The Moody’s report is available online at www.moodys.com/research/Moodys-affirms-Saginaw-Valley-State-Universitys-MI-A1-outlook-stable--PR_905669736.