S&P Downgrades University Credit Ratings

Apr 20, 2017

Just days after Moody's warned of a potential credit downgrade for Illinois' public universities, Standard & Poor's took action to lower the credit of a couple - and placed three on a negative watch list.

Southern Illinois University and the University of Illinois saw credit downgrades. Illinois State University joins them on the watch list with a negative outlook.

SIU President Randy Dunn says it's not surprising - he says the way back has to include an end to the state budget impasse, along with other reforms.
 
"Getting state support coming back to us, in a predictable fashion, and adjusting to that - and becoming even more sustainable, and then also, continuing to tackle the enrollment problem we have at Carbondale."

Dunn says the three-notch slip in ratings from "BB" to "BBB" is a direct result of the state's budget impasse - and could affect efforts the university is hoping to use to attract new students.
 
"We're looking at a public-private partnership, for instance, for construction of new student housing to replace The Towers over on the east side of the SIUC campus. This could make that deal tougher to do."
 
Dunn says bonding and other borrowing will cost more as a result of the downgrade - but he points out the university was not planning to do that for a couple of years.

S&P says it dropped SIU's rating because of the risk to its cash flow because of the state's nearly two-year long budget impasse. Illinois State University and the University of Illinois also received downgrades or were placed in a watch category with a negative outlook.