The University of Pennsylvania received a one-notch bond rating upgrade from Moody's Investors Service, to Aa1 from Aa2.
Moody's assigned a stable outlook to the Ivy League school citing "growing" wealth and a low borrowing pipeline.
The ratings action announced Monday by Moody's impacts roughly $1 billion of debt and $100 million refunding bonds the private university in Philadelphia is slated to issue. Moody's analyst Dennis Gephardt noted the university's successful integration of Lancaster General Hospital into the University of Pennsylvania Health System as playing a large role in the rating upgrade.
"The upgrade acknowledges the University of Pennsylvania's growing wealth relative to peers, expectations of ongoing successful integration of Lancaster General Hospital operations and limited future borrowing plans," said Gephardt in his March 21 report. "The Aa1 rating reflects Penn's premier market position as a comprehensive university with strong student demand and very large research enterprise."
Gephardt added that Penn's strengths are "tempered" by a large and growing exposure to patient care approaching 60% of operating revenue. The university also has "limited spendable cash relative to expenses and ongoing capital needs", Gephardt said.
