Moody’s Assigns A1 Rating to Bonds for ASU System, Cites Financial Improvement at Henderson State
03/16/2022
LITTLE ROCK – Moody’s Investor Services assigned an A1 rating for $42.2 million in bonds for Henderson State University and $24.4 million in bonds for Arkansas State University that will be refinanced to generate cost savings for the institutions.
Moody’s also issued a “stable outlook” for the ASU System that reflects “gradual recovery at Henderson, including improvement in financial performance and liquidity.” The full Moody’s press release can be found here.
Prior to becoming a member of the ASU System in 2021, Henderson’s current long-term bond financing was downgraded from A3 to Baa2 and given a “negative outlook” after the disclosure that capital reserves had been depleted in June 2019. The A1 rating is not only substantially stronger than the current Baa2, but also two levels higher than Henderson’s prior A3 rating as a result of being part of the ASU System and financial restructuring efforts. Following the sale of the Series 2022 bonds, the previous rating for Henderson will be withdrawn.
“This is a strong, third-party validation by a very reputable global research firm that we are taking steps in the right direction financially with Henderson State,” said Dr. Chuck Welch, president of the ASU System. “I’m proud of the work of our entire financial and leadership team at Henderson, our system office and A-State. They are working hard to get Henderson on sound financial footing.
“Our employees at Henderson are enduring painful furloughs and salary cuts right now,” Welch added. “Chancellor Chuck Ambrose and I are grateful for their sacrifices as they continue to provide the best possible education and services for our students. The recovery will continue to take time, but I’m confident we’re on the right path.”
Arkansas State’s bonds were affirmed as A1 based on its “diversified student market role and overall strong operating performance,” Moody’s said.
“The sound financial practices of A-State and our two-year institutions were critical to this rating and outlook,” Welch said. “They have successfully built cash reserves required for an A1 rating and budgeted carefully through the years. We will continue to make quality higher education as affordable as possible for our students while controlling costs.”
The ASU System, based in Little Rock, serves more than 35,000 students annually on campuses in Arkansas and Queretaro, Mexico, and globally online with a total operating budget of $353 million. The ASU System includes Arkansas State University, a four-year Carnegie R2 Doctoral research institution in Jonesboro with degree centers in Beebe, Mountain Home and West Memphis. Arkansas State University Campus Queretaro opened in September 2017. The system's two-year college institutions include ASU-Beebe, with additional campuses in Heber Springs and Searcy and an instructional site at Little Rock Air Force Base; ASU-Newport, with additional campuses in Jonesboro and Marked Tree; ASU-Mountain Home; ASU Mid-South in West Memphis; ASU Three Rivers in Malvern; Henderson State University, a four-year institution in Arkadelphia.
