Universities Shouldn’t Be Punished for Betting on Private Equity
Moody’s rehashes well-known concerns about investing in private companies in a new report on university endowments. It needs to better explain the associated credit risks.
Judging risk.
Photographer: Michael M. Santiago/Getty Images
Moody’s Investors Service recently released a report bluntly entitled, “Private equity exposure increases credit risk for universities with limited wealth.” This is not an opinion by a columnist like me; it will be read as an order in all but name from an organization that influences credit access and interest rates paid by smaller universities. It might as well have been titled, “If you’re not Harvard or Yale, you had better get your endowment out of private equity or worry about your ratings.”
The report isn’t subtle. On page 3 is a chart with names redacted of 59 universities with smaller endowments that Moody’s rates. Board members of all those universities can easily find their school based on its numbers and see where it ranks on the naughty list.