Standard & Poor's Ratings Services has cut its long-term outlook for future payback on the $1 billion-plus owed to bond investors by Rutgers, the State University of New Jersey, to "negative" from "stable," and may cut Rutgers credit ratings from the current "AA" to "A", forcing the taxpayer- and tuition-backed system to pay more interest on future borrowing.
As the school prepares to borrow hundreds of millions more, "Rutgers faces increased credit risk" this summer because it is taking over assets and debts of the BBB+-rated University of Medicine & Dentistry of New Jersey under a law backed by Cooper Health System chairman, insurance broker and Inquirer part-owner George Norcross and NJ Gov. Chris Christie, wrote S&P analyst Ken Rodgers in a report.
"Essentially, the act shifts the state's medical educational and teaching programs mainly to Rutgers University and represents a new mission for the university....
"Rutgers is planning on refinancing approximately $456 million of debt it will assume from UMDNJ and financing other capital projects it has underway or in development sometime later this year with a large bond issue early this summer.