Moody’s Investors Service, a credit ratings issuer that provides financial research on bonds, has downgraded the credit ratings of both Howard University and Alabama State University, according to recent reports.
The Hilltop, the school newspaper of Howard, reported the news on its Twitter feed: Moody’s points to the university hospital’s projected FY2014 operating loss of $37M as a serious reason for its downgrade, the newspaper says.
Alabama State officials said they would review the notice from Moody’s and comment as soon as Monday following the holiday weekend.
“Ongoing weak operating performance required a draw on reserves to cover debt service in 2014, and this is expected to continue through at least 2015, if not longer, resulting in weakening liquidity,” a release from Moody’s states. “A history of weak governance and expense control reduces the prospects that the university will be able to rapidly and strategically restore operating equilibrium.”
Moody’s downgraded Howard’s ratings to Baa3 from Baa1, and Alabama State’s to Ba2 from Baa2, respectfully.
The two black colleges are going through significant changes in senior leadership. Moody’s gave both institutions a negative outlook.