Agency: Penn State bond rating could be downgraded

AP News
Posted: Nov 11, 2011 5:56 PM
Agency: Penn State bond rating could be downgraded

A major credit agency warns that Penn State University's bond rating could be downgraded because of risks to its reputation and finances from a child sex abuse scandal.

Moody's Investors Service said Friday it has put the university's Aa1 bond rating under review for a possible downgrade after ex-coach Jerry Sandusky was charged with molesting eight children over a 15-year period.

Moody's will assess the potential impact on Penn State of risks from possible lawsuits, a decline in students applying to attend the school, loss of donations from philanthropies and changes in its relationship with the state.

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Its strong current bond rating reflects its attractiveness to prospective students, its respected academic program and status as the state flagship and land grant university. That's drawn out-of-state students paying high tuition rates.