S&P downgrades six Illinois universities'
credit ratings
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[April 21, 2017]
CHICAGO (Reuters) - Illinois' budget
crisis dragged down the credit ratings of six state public universities
and Chicago's community college system on Thursday in a slew of
downgrades by S&P Global Ratings.
The rating for the University of Illinois, the state's largest system,
fell one notch to A after S&P determined it could only be three notches
above the state's BBB rating. S&P also warned of a further downgrade if
the state failed to fund the system beyond a stopgap amount of $356
million approved last June.
Illinois is limping toward the end of its second straight fiscal year
without a complete budget due to a political stalemate between its
Republican governor and Democrats who control the legislature.
The impasse has resulted in only partial appropriations for state
universities, forcing most of them to tap reserves and cut expenses.
"Given the budget impasse of fiscal 2016, ongoing fiscal 2017 budget
impasse, and the absence of an agreement among elected leaders, it is
our opinion that state appropriations to public universities in Illinois
will remain uncertain in the intermediate term," S&P said in a report.
Southern Illinois University's credit rating was dropped into the junk
level of BB from BBB, while ratings for Northeastern Illinois and for
Eastern Illinois universities fell deeper into junk, at B, from BB.
Western Illinois University's rating was cut to BB-minus from BBB-minus
and Governors State University's rating was downgraded to BB from
BB-plus.
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S&P also lowered the rating four notches to BBB from A-plus for the
City Colleges of Chicago, which operates seven community colleges.
The ratings were placed on a watch list for a potential subsequent
downgrades.
S&P affirmed an A rating for Illinois State University on Thursday,
but placed the school on the same watch list as the others.
Illinois' record-breaking budget impasse has been hard on the
universities, which have been hit with rounds of bond rating
downgrades over the past two years.
Earlier this week, Moody's Investors Service placed seven Illinois
universities on review for possible rating downgrades affecting $2.2
billion of debt.
(Reporting by Karen Pierog; Editing by Richard Chang)
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