Standard & Poors (S&P) Global Ratings, one of the nation’s premier credit rating services, affirmed UNM’s long-term ‘AA’ rating. At the same time, S&P revised the rating outlook to negative from stable, reflecting the already known challenges of enrollment and state funding.
The S&P Global Ratings reflect an institution's ability to repay long-term debt, based on financial data for multiple fiscal years including the fiscal year ending in 2017. The report applauded the University’s “excellent governance and management,…with a sound strategic and risk management program that includes articulated reserve, debt management and investment policies.”
“I am extremely encouraged to begin my tenure knowing that UNM has been consistently able to maintain an ‘AA’ rating throughout challenging economic times,” said UNM President Garnett S. Stokes. “This is a positive reflection of our overall solid financial footing.”
In January of 2018 S&P identified the nation’s higher education sector as having a bleak outlook. “S&P Global Ratings believes institutions with limited flexibility, whether that be in programming, financial operations, enrollment, resources, or student draw, could face credit pressure in the upcoming year,” analysts for the ratings agency wrote in a report cited by the Chronicle of Higher Education. However, the agency says, opportunities exist for the sector if it can shed its reputation for being slow to change and continue to adopt “nontraditional or new strategies and partnerships.”
Factors such as continued declines in enrollment and lower state appropriations have prompted S&P to lower its outlook on the debt issued on behalf of UNM to negative from stable. The report offers that a revision to stable outlook could occur if “enrollment and applications stabilize, operations improve, and debt and financial resources remain stable or improve.”
“While the current outlook for higher education is less than optimal and has an impact on our institutional outlook,” said Executive Vice President for Administration David Harris. “We have been successfully proactive in the administration of our financial operations and programs, again earning a strong financial rating.”