- Six public universities are lowered, outlooks negative
- Credit rater cites exposure to state that still has no budget
Six Illinois public universities had their credit ratings on about $673 million of debt cut by Moody’s Investors Service because of a political standoff that’s left the state without a budget for four months.
The credit-rating company lowered Western Illinois, Eastern Illinois and Governors State by two steps to Baa3, one level above speculative grade, while Northeastern Illinois was dropped one rank to Baa2. Moody’s cut Northern and Southern Illinois one grade to Baa1, three levels above speculative grade. All have negative outlooks, signaling that they could be lowered again.
“Given expected state funding cuts and the lack of appropriations thus far through fiscal 2016, the university’s reliance on the state will place a strain on operations and liquidity,” Moody’s said in an e-mailed report on Northeastern University.
The slew of downgrades comes less than a week after Moody’s lowered Illinois to Baa1 on Oct. 22 as the budget impasse showed few signs of nearing a resolution. Republican Governor Bruce Rauner and the Democrat-led legislature have failed to pass a spending plan for the year that started July 1, squeezing the finances of universities that rely on state funds.
Two other Illinois universities avoided the downgrades. The University of Illinois had its ratings affirmed on $1.6 billion of debt, while Moody’s also left Illinois State University unchanged. Both have negative outlooks.