S&P: University of Delaware's Series 2018 Taxable Bonds Rated 'AA+'; Other Ratings Affirmed

S&P Global Ratings has assigned its 'AA+' long-term rating to the University of Delaware's (UD) approximately $200 million in taxable bonds, series 2018. At the same time, S&P Global Ratings affirmed its 'AA+' long-term rating on UD's bonds outstanding, and its 'AA+/A-1+' and 'AA+/A-1' ratings on the university's variable rate debt. The rating's short-term component reflect liquidity from various banks through standby bond purchase agreements. The outlook is stable.

"The 'AA+' rating reflects our view of UD's enterprise as extremely strong and financial profile as very strong, with favorable demand metrics, a history of consistently positive operating results, limited reliance on state appropriations, and an adequate balance sheet for the rating," said S&P Global Ratings credit analyst Jessica Wood. Combined, these credit factors lead to an indicative stand-alone credit profile of 'aa+' and a long-term rating of 'AA+'.

Bond proceeds will fund capital projects consistent with UD's capital plan.

UD, tracing its roots as a private institution in the 1700s, became the land-grant college for the state in 1867. The main campus is in the center of Newark, Del., 15 miles southwest of Wilmington. The university served 23,774 students as of fall 2017, or 21,898 full-time equivalents.

The stable outlook reflects our expectation that, during our two-year outlook period, student demand and enrollment will likely be stable and UD will continue achieving positive full-accrual operations. We do not anticipate any significant new debt during the outlook period, and would expect the university to meet any additional debt with commensurate growth in resources.

A negative outlook or rating action during the outlook period could follow a significant deterioration in enrollment or financial operations, or significant additional debt without a commensurate growth in resources such that financial resources become inconsistent with the rating. Although we understand that state appropriations are a relatively small part of operating revenues, a significant decline that hurts UD's operating performance could also result in a negative rating action.

We do not believe a positive outlook or rating action is likely within the outlook period unless there is significant endowment growth, improved levels of cash and investments as a share of operating expenses and debt levels, and an increase in financial margins to levels that are commensurate with those of higher-rated public universities.
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