A rating downgrade could deal Southern Illinois University additional stress when it comes to loan approvals, adding to financial burdens already coming from the state.

Moody’s Investors Service, an international credit agency, lowered the university’s debt rating from an A2 negative to an A3 negative Aug. 9, furthering the agency’s downgrade of the university’s overall credit rating for the last several years. While SIU’s rating was lowered, university President Glenn Poshard said SIU’s rating is on par or better than that of most state universities.

Advertisement

Poshard said the main reason for the debt downgrade is because of Illinois’ financial problems; the state still owes the university millions in appropriations, he said.

“The report states, most explicitly, that it’s due to the state’s downgrade that took place a couple of months ago,” he said. “All public universities are heavily reliant on the state (for) appropriations.”

Poshard said when the state’s debt rating was lowered several months ago, officials were informed that SIU’s rating would be affected, so the decrease was expected. While the university’s rating has lowered, it shares the same rating as the University of Illinois, tying it for the highest rating in the state, he said.

All state universities in Illinois had their debt rating downgraded in the latest Moody’s report, except Northern Illinois University, which was downgraded six months ago, according to Moody’s website data.

Poshard said the rating would affect the university’s plans to borrow $30 million from the bond market to improve campus infrastructure this fall. The new debt rating will increase loan interest rates, he said.

While the university’s rating was lowered, there’s still hope for future recovery, Poshard said.

“It is entirely possible for our rating to improve, but it will depend on the economy of the state,” he said. “When it turns its own situation around, that will be the primary factor.”

Advertisement*