Moody's downgrades ASU's revenue bond rating

Moody's downgrades ASU's revenue bond rating

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MONTGOMERY, AL (WSFA) -

Moody's Investors Service has lowered Alabama State University's revenue bond rating.

According to a news release from Moody's, the action is the result of "a combination of the deterioration of the university's financial profile, uncertainty surrounding the university's relationship with the state following the governor's initiation of a forensic investigation in January 2013, and the diverted attention that this investigation poses to the university's board and management team."

Moody's says the revenue bond rating was downgraded to A3 from A2.

According to Moody's, the rating is under review and could possibly be downgraded even more if the results of a forensic investigation into the university "are found accurate and demonstrate severe deficiencies in governance and management."

Alabama State University released the following statement Friday evening:

Alabama State University learned on Friday - Oct. 17 - that Moody's Investors Service has downgraded its revenue bond rating to A3 from A2.

The release of Gov. Bentley's audit triggered the action taken by Moody's today. The actions by the Governor continue to be expensive for the University on all fronts whether it be legal costs, increased costs to borrow or damage to the good name of this great institution.

We certainly anticipated that this attack on ASU by Gov. Bentley could affect our bond rating. The bond market is very fragile, which has been reflected in the city of Montgomery's rating also being downgraded recently.

The University has increased its debt over the last several years. It was a conscious decision on the part of the University because we realized that unless we enhanced the facilities and developed new academic programs, we would not remain in a competitive position with our peer institutions.

The University has been meeting with the rating agency since Monday to discuss all factors impacting this decision. The University has shown to Moody's that the finances of the University are trending upward. For one thing, our enrollment increased by historic numbers this fall. We believe that is directly attributable to the investments we've made in capital improvements over the past few years.

Copyright 2013 WSFA 12 News. All rights reserved.

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