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Ratings will help lower WVU financing costs

CHARLESTON, W.Va. - West Virginia University earned "A" grades from two national credit ratings firms last week, marks that will help lower financing costs on more than $200 million in university improvement projects.

Standard and Poor's and Moody's, two of the country's three major credit rating agencies, both issued high ratings on more than $213 million worth of bonds WVU is planning to sell later this month.

Standard and Poor's rated the bonds "A " and Moody's issued a "Aa3" rating. Both ratings were on the upper end of the companies' rating scales.

The ratings mean analysts believe WVU has a strong ability to meet its obligation to pay off the bonds, making them a high-quality investment.

The higher ratings also mean WVU will be able to sell the bonds at lower interest rates when they take them to market, meaning the university will make smaller interest payments to investors over the life of the bonds.

In addition to the ratings on the new bonds, the two rating agencies also reaffirmed their strong ratings on WVU's existing bonds.

They also issued a stable outlook on the university's future finances.

"The stable outlook is based on Moody's expectation that WVU will continue to experience solid student demand trends for its undergraduate, graduate and professional programs, with healthy system-wide financial resource levels and favorable debt service coverage," the Moody's analysis said.

WVU officials welcomed the news, saying it shows the university is on strong footing as it moves forward with improvement plans in the coming years.

"As West Virginia University enters 10 years of construction projects that are expected to cost more than $320 million, this latest bond rating attests to WVU's strong financial position and is a positive statement on our future," Narvel Weese, WVU Vice President for Administration and Finance, said in a statement.

In the past six years, WVU has invested nearly a half a billion dollars in new construction and renovations across the Morgantown campus, as well as at its Potomac State College, WVU Tech and Jackson's Mill locations.

The WVU Board of Governors approved an updated 10-Year Campus Master Plan in December. The plan includes on more than $320 million in new facilities, infrastructure and renovations over the next five years.

The $213 million bond sale later this month is just one part of the ongoing plan.

The plan covers projects already under way, including the university's Advanced Engineering Research building, College of Law addition, College of Physical Activities and Sports Sciences building, Student Health and Wellness facility and the first phase of modernizations to the school's Personal Rapid Transit system.

Other projects planned over the next five years include a new Agricultural Sciences building, the WVU Art Museum and Evansdale Campus redevelopment, and updates to student housing.

While the firms did note the school's solid enrollment and good fundraising base, they did say WVU faces some financial challenges.

Most notable was an increase in recent years in other post-employment benefits, or OPEB, costs.

"The university's financial resource ratios have been substantially weakened since fiscal 2008 due to the recognition of large unfunded other post-retirement employee benefit liabilities," said Standard & Poor's credit analyst Shivani Singh.

According to Moody's, WVU's 2012 balance sheet was weighed down by a $161 million OPEB liability.

But both firms noted recent state action to reform OPEB liabilities.

Last year, Gov. Earl Ray Tomblin and the state Legislature passed a bill designed to pay down these costs over time.

Both rating agencies said the law should help improve WVU's balance sheet over time.

"Standard & Poor's will continue to monitor the state's progress in funding its OPEB liabilities and the impact of recent measures on the size of WVU's OPEB liabilities and financial resources in future years," the Standard and Poor's report said.

Contact writer Jared Hunt at or 304-348-5148.


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