Metropolitan State University of Denver has received a favorable credit report from the Moody’s rating service, ensuring that the University can borrow money for new construction at favorable rates.
The A1 rating on approximately $47 million of outstanding revenue bonds means the University’s credit rating is stable, said Jim Carpenter, the University’s chief financial officer. “They reaffirmed where we’ve been in recent years.”
The annual ratings, which affect the interest rates MSU Denver would be charged if it borrowed money for a capital project, reflect Moody’s analysis of the University’s revenue, expenses and debt obligations, he said.
“It’s reputational, and it’s about interest rates — those are the two things that it impacts,” Carpenter said. “What it says is we’re a financially stable institution right now.”
Highlights from this year’s review
The review process entails a painstaking review of MSU Denver’s financial status, he said.
“They do a deep dive into our financial statements,” Carpenter said. “They have a series of benchmarks that they go through and metrics that they’re looking at, largely from our financial statements and from our budget. Then, they do an in-depth interview with us.”
Pluses for this year’s review include continued enrollment growth, which helps to drive revenue, he said, as well as MSU Denver’s relatively modest outstanding debt.
“That gets a little better every year because we haven’t issued new debt in several years, so that’s generally been falling off,” Carpenter said.
A commitment to fiscal prudence
Another credit positive has been increased state support in recent years, he said.
Carpenter, who has been on the job for a year and a half, said the Moody’s rating reflects the University’s longstanding commitment to fiscal prudence.
“We’ve had consistent and stable financial management for a long time here,” he said. “There’s a lot there that we are working against, but we’ve had very prudent financial management for many years to keep us in a place of fiscal health.”
MSU Denver’s credit rating is comparable to that of the Colorado School of Mines, he said, adding it is “a notch below the University of Colorado and Colorado State University and a cut above other Colorado institutions.”
Future outlook
To help preserve the institution’s financial stability, the MSU Denver Board of Trustees approved a new reserve policy last January, Carpenter said. “We’re saying, ‘We’re going to have reserves that are at this level’ to try to have really solid, sound, conservative financial management.”
The University could take on new debt to construct student housing on campus, provide gap financing for the Classroom to Career Hub project and potentially upgrade the PE Building, he said.
“What I have said pretty regularly to our board is that I do anticipate us issuing some debt at the end of 2024 or in early 2025,” Carpenter said. “We don’t have any firm plans right now.”