Moody's Investors Service on Friday raised Villanova University's issuer and revenue bond ratings to Aa3 from A1 and revised the outlook on the credit to stable from positive.
The Catholic university, located 14 miles west of downtown Philadelphia in a suburb of Radnor Township, has $219 million of debt outstanding.
“The upgrade of Villanova University's ratings to Aa3 from A1 is driven by its multi-year trend of positive momentum on multiple fronts,” Moody’s said. “Over the last five years, coverage of total cash and investments relative to total adjusted debt improved to 5.8x from 3x, even as the university concurrently made extensive capital investment that lowered the age of plant to 12 years from 16 years.”
The rating agency cited revenue growth that exceeded many competitors.
“The Aa3 issuer rating is supported by Villanova's excellent brand and strategic positioning, consistently strong operating performance and manageable leverage,” Moody’s said.
Moody’s added, the track record of the university’s leadership looks likely to buttress positive financial performance and student demand trends into the future.
“Despite competitive and demographic headwinds, Villanova's strong academic reputation as a selective private university with an appealing location, diverse programs and attractive facilities will support ongoing favorable student demand,” Moody’s said.
The stable outlook reflects Moody's expectations of continued strong operating performance and liquidity. Moody's had revised the outlook on the bonds to
"A mix of investment returns, philanthropy and retained cash flow drove a 55% increase in wealth over the last five years to a sizeable $1.4 billion for fiscal 2021,” Moody’s said. “A detailed capital planning framework has supported consistent investment in campus infrastructure, while maintaining manageable debt relative to wealth, scale and operations.”
Villanova University was founded in 1842 by the Augustinian Order of the Roman Catholic Church. It offers undergraduate, graduate and professional programs and had a Fall 2021 enrollment of 9,511 and a fiscal 2021 revenue base of $503 million, according to Moody's.
In October 2020, S&P Global Ratings affirmed Villanova's AA-minus issuer credit rating. In 2019, S&P had raised the ratings to AA-minus from A-plus saying "the higher rating reflects the university's improvement of various demand metrics including selectivity and matriculation to levels comparable with peers along with the continued robust operating surpluses and successful fundraising which have improved financial resources over time."
