Kenyon’s bond rating dropped from an A1 to A2 rating in November of 2017 according to Moody’s, an investment information website. This lower bond rating means the College’s financial future may be at risk.
Bond ratings help potential investors in the College analyze the value of the investment as a financial asset. Bonds are established agreements between an investor and a company or organization. Via a bond, the investor loans money to the company and is paid back in full with interest. Bond credits are ranked into about 15 categories, with A1 being the second and A2 the third.
Kenyon’s shift from A1 to A2 may leave the College liable to receive less investment in the future. This downgrade didn’t come as a complete surprise, considering the College’s recent financial activity, according to Vice President for Finance Todd Burson.
“When the College updated the Campus Master Plan in 2014, a number of potential capital projects were identified,” Burson said. “Since 2014, the College’s senior administration and the Board of Trustees have spent a considerable amount of time reviewing and prioritizing the identified capital projects in the Master Plan. As one can imagine, figuring out how to pay for the projects was and continues to be the the biggest challenge.”
Burson said that, while the lowered bond rating may have been the result of the revenue spent on the Campus Master Plan, the drop could be amended by the recent anonymous 75 million dollar donation to the school.
As Assistant Professor of Economics PJ Glandon suggested, “The College could aim for a higher bond rating by borrowing less and investing less in our facilities,” he said. “That’s a good thing because the next time we need to issue bonds, a large variety of investors such as pension funds and insurance companies will consider buying them. What matters most is the College’s ability to attract outstanding students and deliver an exceptional education to those students.”