New York, May 03, 2022 -- Moody's Investors Service has assigned a Aaa to Princeton University's (NJ) planned issuance of approximately $300 million in Princeton University Revenue Bonds, 2022 Series A, to be issued by the New Jersey Educational Facilities Authority, and $300 million of Taxable Bonds, Series 2022, to be issued by the Trustees of Princeton University. Moody's maintains Aaa issuer and long-term debt ratings and P-1 ratings on tax-exempt and taxable CP programs. The university had $3.3 billion of debt for fiscal 2021 (June 30 year end). The outlook is stable.
RATINGS RATIONALE
The Aaa issuer rating incorporates Princeton's substantial wealth, which enables a high level of financial assistance for students, and premier international reputation as a private liberal arts university. Princeton's exceptional strategic positioning is further supported by a strong culture of philanthropy, with three-year average gifts per student of more than $46,000, and superior student demand. Rigorous strategic and financial planning support credit quality as well as ongoing prospects for consistently positive operating results and ample liquidity. The primary risk facing the university is a significant, sustained downturn in financial markets given the university's comparatively high reliance on investment income and gifts. Princeton's considerable reserves, historically excellent EBIDA margins and strong governance and management credibility add resiliency to its credit profile.
Assignment and maintenance of the Aaa debt ratings reflect the debt's unsecured general obligation nature.
The highest short-term ratings of P-1 for the commercial paper programs are based on Princeton's fundamental credit strength, its strong internal liquidity and its experienced treasury management.
RATING OUTLOOK
The stable outlook reflects Moody's expectations of continued positive operations supported by a very strong market position, steady and significant gift revenue and substantial wealth. The outlook assumes that thorough strategic and financial planning as well as monitoring will continue, with adjustments made as necessary.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Not applicable
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Multi-year erosion of cash and investments given the university's high reliance on endowment support for operations
- For the short-term rating, inability to maintain adequate daily liquidity coverage of demand debt or significant deterioration of long-term credit quality
LEGAL SECURITY
Rated debt is an unsecured general obligation of the university.
USE OF PROCEEDS
Proceeds of the 2022 Series A bonds will be used for the costs of the acquisition, construction, renovation and installation of capital assets and to pay costs of issuance. Proceeds of the Taxable Series 2022 bonds will be used for general corporate purposes.
PROFILE
Princeton University, located in Princeton, New Jersey, is a highly selective residential liberal arts university with an emphasis on research. For fiscal 2021, the university had $38 billion in cash and investments and operating revenue of $2 billion. In fall 2021, the university enrolled approximately 8,400 students, approximately two-thirds of whom were undergraduates. Princeton also operates the Princeton Plasma Physics Laboratory on behalf of the federal government.
METHODOLOGY
The principal methodology used in these ratings was Higher Education Methodology published in August 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1257002. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
Susan Shaffer
Lead Analyst
Higher Education
Moody's Investors Service, Inc.
7 World Trade Center
250 Greenwich Street
New York 10007
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Rachael McDonald
Additional Contact
Housing
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653