KU’s high credit rating to cut interest on bonds

University earns third-highest ranking from Moody's Investor Service

For the first time in history, Kansas University has solicited a credit rating with hopes of cutting interest rates.

Moody’s Investor Service of New York has given KU an AA2 credit rating, the third-highest rating it assigns.

“We haven’t had an overall rating at the university before,” said Theresa Klinkenberg, chief business and financial planning officer for KU. “The better your rating, the better interest rates you can get in the bond market.”

Moody’s top credit rating is AAA, followed in descending order by AA1, AA2, AA3, A1, A2 and A3.

The state of Kansas also has an AA2 rating.

In the past, ratings on KU bonds were determined on a project-by-project basis, Klinkenberg said. For instance, the recent Student Recreation Fitness Center project had an AA3 rating.

Klinkenberg said interest rates should be lower on most projects in the future. KU had $126.5 million in outstanding bonds for 17 projects at the end of the last fiscal year.

In assigning its rating, Moody’s cited KU’s increasing research activities, the increasing assets of the KU Endowment Association, a history of balanced financial operations and low debt levels.

KU is one of six public universities given the AA2 rating by Moody’s. The others are Indiana University, Michigan State University, Ohio State University, the University of Nebraska and the University of Minnesota.

Moody’s has assigned AAA ratings to the University of Michigan, the University of Virginia and the University of Texas, and AA1 ratings to the University of Washington, Purdue University, the University of North Carolina at Chapel Hill and Texas A&M University.