Harvard University, MA Series 2024A, 2024B Bonds Assigned 'AAA' Rating; Outlook Is Stable
NEW YORK (S&P Global Ratings) Feb. 29, 2024--S&P Global Ratings assigned its 'AAA' long-term rating to the $750 million series 2024A taxable bonds issued by the President and Fellows of Harvard College, Mass.; and the $817.2 million series 2024B tax-exempt revenue bonds issued by the Massachusetts Development Finance Agency for Harvard University (Harvard), Mass. At the same time, S&P Global Ratings affirmed its 'AAA' rating on the taxable and tax-exempt bonds outstanding issued by the President and Fellows of Harvard College and the Massachusetts Development Finance Agency for Harvard. S&P Global Ratings also affirmed its 'A-1+' short-term rating on various debt issued by and for Harvard. The outlook, where applicable, is stable.
"We assess Harvard's enterprise risk profile as extremely strong, characterized by exceptional selectivity and matriculation rates," said S&P Global Ratings credit analyst Laura Macdonald.
We characterize Harvard's financial risk profile as very strong, highlighted by robust financial resources ratios and strong operating margins coupled with a history of strong fundraising.
The rating reflects our assessment of Harvard's following strengths:
- Exceptional financial resources, provided by an endowment of $51 billion as of June 30, 2023;
- Healthy revenue diversity;
- Very strong fundraising ability;
- Robust demand for academic programs at the undergraduate, graduate, and professional levels, and a large base of sponsored research; and
- A track record of modest full-accrual operating surpluses.
These strengths are offset by Harvard's reliance on investment-driven revenue for 37.6% of the university's operating revenue.
The stable outlook reflects our expectation that during the next two years Harvard will maintain its exceptional demand and balance sheet strength relative to operating expenses and debt. The outlook also reflects our expectation that operating performance will remain positive.
Although unlikely, we could consider a negative outlook or a downgrade with a sustained weakening of demand, the issuance of additional debt without commensurate resource increases, or if overall financial resources deteriorate.
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.spglobal.com/ratings for further information. Complete ratings information is available to RatingsDirect subscribers at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.spglobal.com/ratings.
European Endorsement Status
Global-scale credit rating(s) issued by S&P Global Ratings' affiliates based in the following jurisdictions [To read more, visit Endorsement of Credit Ratings] have been endorsed into the EU and/or the UK in accordance with the relevant CRA regulations. Note: Endorsements for U.S. Public Finance global-scale credit ratings are done per request. To review the endorsement status by credit rating, visit the spglobal.com/ratings website and search for the rated entity.
| Primary Credit Analyst: | Laura A Kuffler-Macdonald, New York + 1 (212) 438 2519; laura.kuffler.macdonald@spglobal.com |
| Secondary Contacts: | Jessica L Wood, Chicago + 1 (312) 233 7004; jessica.wood@spglobal.com |
| Jessica H Goldman, Hartford + 1 (212) 438 6484; jessica.goldman@spglobal.com |
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