Southwestern University merits bond-rating upgrade

Moody's Investors Service has upgraded Southwestern University's long-term rating from A1 to Aa3. The rating applies to $12.5 million of outstanding bonds.

According to Moody's, the upgraded rating is based on Southwestern's "substantial balance sheet cushion relative to debt, and good growth potential from private philanthropy; its successful, but challenging, market niche as a small, selective liberal arts college in a state dominated by flagship public universities; and its history of robust operations with the recent narrowing in margins due to investment and strategic initiatives."

Based on institutional research of Moody's rankings, Southwestern shares the Aa3 ranking with seven other elite liberal arts institutions: Bryn Mawr College, Colorado College, Haverford College, Lafayette College, Macalester College, Middlebury College and Whitman College. Only 13 national liberal arts colleges maintain higher ratings. Additionally, Southwestern is the only "AA rated" national liberal arts college not included in U.S. News & World Report's top tier of 50 schools. Southwestern currently ranks 55th in the nation.

Among Texas private colleges and universities, only Rice University ranks higher with a "AAA" rating.

Moody's reports that a strong gift flow and favorable market conditions have allowed cash and investments at Southwestern to grow by more than 85% over the past six years to $325 million in 2001. Expendable resources also provide a significant degree of operating flexibility, covering nearly six and a half years of operations.

Moody's expects that the University will continue to strengthen its established market niche as a small, selective liberal arts institution by providing "high quality academic programs in a market dominated by large flagship public institutions." Growing interest in Southwestern's academic program is reflected in the 59% selectivity (acceptance) rate for the Fall 2001 class, compared with a 79% rate in 1997.

According to Moody's, "Market leading colleges and universities, defined as those rated A1 or higher, are using their stores of wealth and market power to accelerate capital investment in their campuses, while also spending more on faculty salaries, technology and student financial aid."

Southwestern's Vice President for Fiscal Affairs Richard Anderson said, "With this new rating, our future borrowing costs could be significantly lessened."

Browse current S.U. news
Browse the S.U. Headline News Archive
Return to the S.U. home page