S&P Upgrades University System of Maryland's Bond Rating to AA+
ADELPHI, Md. (June 10, 2008) - In advance of the sale of approximately $140 million in auxiliary facility and tuition revenue bonds, Standard & Poor's has announced the upgrading of the University System of Maryland's parity long-term debt from AA to AA+. Standard & Poor's also assigned the AA+ rating to the system's series 2008A auxiliary facility and tuition revenue bonds.
According to Standard & Poor's, USM's bond rating was raised "to reflect the system's consistently strong operating performance, solid demand, and history of good operating and capital support from the state of Maryland (AAA/Stable)."
"We are very proud to have received this rating," said Joseph Vivona, USM's vice chancellor of administration and finance and chief operating officer. "Practically, it means a lower interest rate that reduces the cost of future debt the system may issue. It also facilitates more successful collaboration with the private sector as we move toward utilizing more public-private partnerships to build facilities such as student housing and parking."
Standard & Poor's report attributed USM's upgrade to a number of factors, including:
- Rising levels of support from the state of Maryland
- Good financial performance and revenue production
- Increasing enrollment and demand
- Solid progress on the University System of Maryland Foundation's $1.8 million consolidated capital campaign
- Manageable maximum annual debt service (MADS) of 3.4 percent of operating expenses
USM has witnessed historically high funding levels over the past three years and recently saw a 9.4 percent increase-$75.1 million total-in state operating budget support for FY 2009. In the fall 2007, Governor Martin O'Malley and the General Assembly also created a new dedicated funding source for higher education, the Higher Education Investment (HEIF). The fund dedicates 50 percent of the revenue from a 1.25 percent increase in the state's corporate income tax to higher education and workforce development projects.
"This rating is an indication of the strength of our leadership--from our campuses to the system office level--and of system-wide programs such as our effectiveness and efficiency initiative," said Vivona. "At a time when the uncertain economy has had a negative impact on many universities nationally, USM has seen increased state investment in higher education in both our operating and capital budgets. That speaks volumes of the soundness and success of our management principles."
Contact: John Buettner
Phone: 301.445.2719
Email: jbuettner@usmd.edu