Standard & Poor’s, a nationwide credit ratings agency, has revised its outlook on the University of Arizona’s outstanding debt from “stable” to “negative.”
The firm, also known as S&P, joined Moody’s, another credit ratings agency, in a negative outlook on Wednesday. Moody’s changed its rating for UA from “credit positive” to “negative” last month.
“The negative outlook is based on the anticipation of increased deficit operations and pressured liquidity,” S&P Global Ratings Credit Analyst Laura Macdonald said in a written statement.
S&P, along with Moody’s and Fitch Group, is considered one of the “Big Three” credit rating agencies and has national prominence.
The agency wrote it could revise the outlook to stable should the UA “demonstrate progress toward fiscal balance while maintaining or improving its financial resources from fiscal 2023 levels” while maintaining stable enrollment.
On the flip side, S&P noted it could further lower the rating if the university fails to “make progress toward structural balance, or if the liquidity position weakens significantly or enrollment declines.”
In a statement to the Arizona Daily Star, a spokesperson for the UA said, “the ongoing implementation of our financial action plan will assure that the university stands on solid financial footing and continues to provide outstanding educational experiences for our students and research that drives economies and improves lives.”
“Importantly, S&P Global Ratings affirmed its bond and COPs ratings for the University of Arizona,” the UA statement said. “The future of the University of Arizona remains bright.”
When Moody’s downgraded the UA last month, it wrote that the “inability to right size operations in a relatively short period of time,” and “turnover in management, recent evidence of weaker financial monitoring, and ongoing governance scrutiny,” were among the reasons for the change.
The downgrade of the UA’s rating comes as the university, which has been dealing with a deficit of $177 million, is in the midst of a provost search and about to embark on a presidential search. UA President Robert C. Robbins announced earlier this week that he will resign from his post by June 2026.
Despite the UA’s weakened rating, S&P affirmed its positive rating of the Arizona Board of Regents, the panel that oversees the state’s three public universities. ABOR has an “AA-” long-term rating for its system revenue bonds issues for the UA and an “A+” long-term and underlying rating on its certificates of participation issues for the UA.
Additionally, S&P affirmed its “A+” long-term rating of ABOR’s “Stimulus Plan for Economic and Educational Development” bonds issues for the UA.
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