Moody’s Investors Service no longer has a stable outlook for the University of Akron.
The credit agency downgraded UA’s financial outlook this week to “negative” while also assigning an A1 rating to a proposed $82 million bond refinancing.
It also affirmed A1 ratings for two other construction-related bond issues.
Moody’s cited multiyear enrollment declines and an expected smaller entering class in the fall putting financial pressure on the school as the reason for the negative outlook.
The agency also noted that the school has “a high debt and pension burden relative to balance sheet reserves and operations.”
A Moody’s analyst couldn’t be reached for comment.
UA spokesman Wayne Hill said Tuesday the school is pleased with the A1 rating for the upcoming bond issue. The university is looking to refinance its debt to save money, he said.
He also said the school is working to boost the number of students.
Enrollment has fallen from a high of about 30,000 to about 25,000.
Moody’s warned that it could downgrade future ratings if the university doesn’t “at least stabilize enrollment, align its budgets with the smaller revenue base and generate sufficient cash flow to cover debt service at or above 1.5 times.”
If UA turns around enrollment, its bond ratings also could improve, the agency said.
But Moody’s hasn’t been optimistic about the university’s efforts. It noted in a report in July 2015 that it “will be hard” to boost revenue based on enrollment declines and other factors.
Ratings help investors analyze risks of bonds. They also help determine interest rates.
The highest rating is Aaa, while the lowest is C.
Rick Armon can be reached at 330-996-3569 or rarmon@thebeaconjournal.com. Follow him on Twitter at @armonrickABJ.