Morgan State University receives high ratings from Moody’s and S&P

Despite the economic volatility and uncertainty spurred by the pandemic, Morgan State University continues to amass strong financial assessments by respected and industry-leading rating agencies Standard & Poor’s (S&P) Global and Moody’s, with credit opinions of A+ and A1 respectively. Following an intensive examination of the University’s fiscal operations, its financial position and financial trend analysis, Morgan solidified an investment grade credit quality of A1 rating and stable outlook from Moody’s in its comprehensive reporting recently released at the end of May 2021. In the S&P’s credit opinion, released in Q1 of this year, the University received a long-term and underlying A+ rating for the fifth consecutive year, making Morgan one of the highest-rated HBCUs on both Moody’s and S&P’s list.

“As an institution rooted in integrity, Morgan takes very seriously its responsibility to be extraordinary stewards of the resources under its fiduciary care,” said David K. Wilson, president of Morgan State University. “Despite the challenging year we’ve experienced due to a global pandemic, the fastidiousness of the management team that we have in place and the support received from our governing board allowed the University to remain in a positive position, achieving targeted goals. The very strong bond ratings from S&P and Moody’s—two of the most respected leaders in this space—are affirmations that Morgan is not only on sound footing fiscally but is also in the best financial position in more than 30 years.”

Among the highlights supporting the recent A1 rating from Moody’s, the analysis detailed the following strengths in Morgan’s financial credit profile:

• Supportive government funding with the state of Maryland’s operating appropriations providing 45% of operating revenues in fiscal 2020
• Modest financial leverage with spendable cash to pro forma debt of 2.3x in fiscal 2020, debt to cash flow of 4.1x and an all-fixed rate debt structure
• Favorable liquidity with spendable cash and investments rising to $129 million in fiscal 2020 from $88 million in fiscal 2015 and 180 monthly days cash on hand in fiscal 2020
• Fundraising success with several large gifts received in fiscal 2021
• The University’s specialized market niche along with solid state and federal support and generally stable enrollment trends bolster market position

Morgan’s consistently strong operating and capital support from the State of Maryland coupled with the university’s reluctance and general ease with regard to borrowing have resulted in a modest leverage and high degree of debt affordability. In addition to contributing to the positive bond rating, these measures account for Morgan’s stable outlook and strengthened operating performance over time, which is further buoyed by steady enrollment prospects and continued healthy support from the state.

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