Marshall University is unlikely to default on its financial commitments, says a credit ratings agency that also gave the school high marks on its more than $80 million in bond debt.
The grading, issued by New York- and London-based Fitch Ratings, lists Marshall's bond debt in the agency's "AA" category, the second highest designation that can be given.
According to the agency, Marshall, which is West Virginia's second largest four-year university, is in a stable position to repay those debts because of steady revenue streams from housing, dining and parking facilities, as well as various rental incomes and fees the school collects.
A favorable bond rating makes debt issued by the school more attractive to investors.
The agency's rating scale has three "A," "B" and "C" categories, respectively, with A's signifying high credit quality, B's signifying either good or speculative credit quality and C's signifying varying levels of risk. It also has two categories for default ratings.
Fitch Ratings, along with Moody's Investors Service and Standard and Poor's, is a nationally recognized rating agency that determines the health of an institution's credit for investment purposes.
Marshall received the same grade in 2013, the last time the agency reviewed the school's finances.
In its report, the agency says the rating reflects "historically stable student enrollment" and that it expects Marshall to balance its books despite continued cuts in state appropriations, which have decreased 12 percent since 2013.
According to the agency, Marshall has $101.6 million in total outstanding debt, all of which is locked in at a fixed rate.
Marshall has received similar grades from other credit rating agencies.
Moody's last year gave the university an "A1" rating, an upper-medium grade that signifies low credit risk.
Like Fitch Ratings, Moody's has a three-tier rating scale with three similar "A," "B" and "C" categories.
In its most recent rating, Moody's said Marshall demonstrated "sound budgetary discipline" and had a healthy cash flow through state and federal funding as well as donor support and auxiliary revenue.
The agency, however, did outline challenges that, if realized, could downgrade the university's bond rating.
Specific challenges cited by Moody's include decreases in state support and research funding and increased competition to attract undergraduate students from other universities in and outside the state, some of which have more financial resources. The agency said competition for undergraduates is reflected in declined admittance of first-year students, which fell to 44 percent in 2013 from 61 percent in 2009. This year, the school enrolled nearly 2,000 first-year students.
In 2012, Marshall received an "AA" rating from Moody's.
Interim President Gary White, in a statement, said the Fitch rating shows that Marshall is fiscally stable and financially responsible in its planning through years of reduced state funding.
Reach Samuel Speciale at sam.speciale@dailymailwv.com, 304-348-7939 or follow @samueljspeciale on Twitter.