Moody’s Investor Service placed Georgetown University’s debt rating on its “watchlist” for a potential downgrade on Jan. 8 as a result of the university’s budget deficit. The move comes after the service downgraded the university’s debt rating six months ago.
The watchlist status by Moody’s, one of the two major credit rating agencies, could be a precursor to drop Georgetown’s long-term rating from a rating of A3 to Baa1. oody’s lowered Georgetown’s long-term rating from A2 to A3 last June. Of the 19 possible ratings for investment grade bonds A3 is the seventh highest and Baa1 is the eighth highest.
The ratings assess each institution’s relative financial strengths and affect their cost of borrowing. As a result, institutions that have lower ratings and higher risk must offer higher interest to investors.
