10/11/2004

Contact: Todd Cohen, University Relations, (785) 864-8858

KU credit rating among best in nation for public universities, investor service says

LAWRENCE -- Citing strong growth in research activities and enrollment along with low debt levels, a major New York investor service has assigned the University of Kansas a credit rating that places it among the top 13 public universities.

Moody's Investor Service has give the university an AA2 credit rating, the third-highest rating it assigns. Only five other public universities have an AA2 rating, and only seven others have higher ratings. Moody's rating scale starts at AAA and descends as follows: AA1, AA2, AA3, A1, A2 and A3.

"Hopefully the university will benefit from more favorable interest rates on the bonds in the future as a result of this rating," said Theresa K. Klinkenberg, chief business and financial planning officer at KU.

Higher ratings typically result in lower interest costs for the organization and lower risk for bond buyers.

In assigning the credit rating, Moody's cited factors including:

-- A 140 percent increase in sponsored research in the last decade and the expectation of additional growth.
-- A growing financial resource base, notably the substantial assets and fund raising of the Kansas University Endowment Association.
-- A history of balanced operating performance, despite state funding cutbacks.
-- Low debt levels with manageable additional borrowing plans.

At the end of the last fiscal year, KU had $126.5 million in outstanding bonds for 17 projects ranging from residence-hall renovations and child-care facilities to parking garages and the student recreation and fitness center, Klinkenberg said.

Other universities sharing the AA2 credit rating are Indiana University, Michigan State University, Ohio State University, University of Nebraska and the University of Minnesota.

The only schools with higher ratings are the University of Michigan, University of Virginia and the University of Texas System with the top AAA rating, and the University of Washington, Purdue University, University of North Carolina at Chapel Hill and the Texas A&M System at AA1.