Public/Private Partnerships: Understanding the Rating Agency’s Perspective
Increasing demands for capital expansion combined with a continued weak economy make partnerships with private entities an attractive option for financing new campus facilities. But before forming partnerships, an institution must review the possible trade-offs, including implications of those partnerships on the institution’s risk profile, debt capacity, and credit rating. To learn more about how a rating agency will evaluate the credit impact that any given public/private (P3) project will have on the affiliated university, we interviewed Karen Kedem, the vice president, senior analyst, and co-manager of Moody’s U.S. Higher Education and Not-for-Profit Team. Kedem spoke with Academic Impressions recently about how Moody’s analyzes the credit risks associated with these transactions, as well as how institutions can work more effectively with the agency as they prepare to enter into a P3 partnership. Increasing demands for capital expansion combined with a continued weak economy make partnerships with private entities an attractive option for financing new campus facilities. But before forming partnerships, an institution must understand various structures and options, as well as possible implications of the partnerships on risk profile, debt capacity, credit rating, and even town-gown relations. Here are several key points Kedem shared with us this week. AI. What does Moody’s look for when […]