McGill credit rating confirmed by S&P

McGill University is pleased that Standard & Poor’s Ratings Services has confirmed the University’s credit rating at AA- (Stable), one notch above that of the province of Quebec. In a report dated Dec. 14, S&P says the rating reflects McGill’s “excellent student-demand and research profile” and a moderate debt load, relative to peer institutions. At the same time, the ratings service notes that “the restrictive and low tuition regime” in Quebec “results in greater dependence on provincial support and therefore less-diversified sources of revenue” than at rated universities in other provinces.

“We are gratified by this recognition of the University’s sound management and governance amid a very difficult financial environment,” said Michael Di Grappa, Vice-Principal (Administration and Finance).“We are committed to doing everything possible to maintain our position as a leading research university and major contributor to Quebec society. The S&P report is testament to what we have achieved – but also underscores the steep challenges we will face if the government pushes ahead with the cuts in university funding that it has recently announced.”

S&P observes that the university’s “current reliance on Quebec constrains the rating.” Because McGill’s rating “is one notch above that of the province, without a significant increase in financial flexibility and a material reduction in debt, we believe than an upgrade is unlikely in the near term,” S&P adds.

The report also notes that McGill has estimated that funding cuts recently announced by the provincial government could push the University’s operating-fund deficit to $30 million in the current fiscal year.  “In our view, this level of deficit and the associated drop in provincial support, combined with limited tuition flexibility, could place significant downward pressure on our ratings on the university.”