UMass Earns Strong Bond Ratings

UMass’ ratings affirmation signals strong management and strategic planning

Moody’s, Fitch, and S&P Global, the three major bond ratings agencies, recently reaffirmed UMass’s strong bond ratings, citing robust management practices, comprehensive long-term strategic plans, and solid demand in an increasingly competitive market to attract students.

The agencies’ confidence in UMass makes the university’s bond an attractive investment. All three agencies assigned UMass bonds a “stable” outlook, indicating the university maintains a strong financial footing and is well-positioned to meet its credit obligations.

Why do bond ratings matter for a public university? Bond ratings are crucial for investors as they provide a snapshot of the creditworthiness of a bond issuer.

Think of bond ratings as financial report cards for companies and governments – helping investors gauge the risk associated with investing in a particular bond. A higher rating implies lower risk, and typically lower borrowing costs for the organization. In contrast, lower ratings suggest higher risk, and higher borrowing costs.

By securing competitive bond ratings, we ultimately save the university money in the long-term, enabling us to invest more in our mission of education, research, and service.

Disciplined financial oversight and accountability framework These strong ratings are a direct result of the effective policies our management team and Board of Trustees put in place to manage the university’s finances, and ensure we act in a way that competitively positions UMass.

Moody’s report praised UMass’ disciplined financial oversight and accountability framework and pointed to solid support from the Commonwealth of Massachusetts as well as significant research activity as factors contributing to the excellent rating.

A university’s finances must be strong to fulfil its mission to educate students and drive critical research.

All colleges and universities face difficult financial challenges these days, including:

• Demographic changes leading to declining enrollment.
• Significant increases to operating costs.
• Fewer high school graduates enrolling in college. In 2021, immediate college enrollment dropped 10 percentage points in Massachusetts, according to the Hildreth Institute.

Despite these headwinds, UMass is employing financial discipline to deliver on its mission to educate, conduct research, and contribute to the greater good of the Commonwealth.

Driving Economic Impact and Supporting the Talent Pipeline

At UMass, we are good stewards of our resources, and those that are invested in the university by the state. According to the latest economic impact report by the UMass Donahue Institute, investment in UMass yields both talent and financial impacts all across the state.

Nearly 75 percent of UMass graduates work in Massachusetts for at least five years after graduating with 360,000 alumni living and working in the state.

I also take great pride in the fact that UMass research directly drives economic development in the state, with UMass attracting $484 million in federal funding and conducting groundbreaking research in some of the state’s most important industries. Our research enterprise has grown to a record-high $813 million – the fourth largest in the New England.

In addition to the ratings reports, UMass recently received an award from the Public Risk Management Association (PRIMA) for “Outstanding Achievement for Enterprise Risk Management,” a recognition of our management team’s financial accountability framework that continues to underpin steady financial operations. Enterprise risk management is a component ratings agencies consider.

While it’s important for us to appreciate the work that we have done to get here, we also must recognize that prudent financial management requires us to stay focused and disciplined as we look ahead. We are doing the essential work required to ensure the University of Massachusetts remains on sound financial footing and has a solid foundation to continue delivering on our education, research, and public service mission.