Moody's to downgrade Maryland

Moody’s Investors Service downgraded Howard University’s credit rating Thursday for the second time in less than a year, citing a “precipitous deterioration” in the financial condition of the university’s teaching hospital.

The university’s new rating of Baa3, down from Baa1, is the lowest investment-grade rating from Moody’s on a scale that runs from Aaa to C. It means that Moody’s analysts consider revenue bonds issued on behalf of the private university in Northwest Washington to be a moderate credit risk for investors.

Until last September, Moody’s had given Howard’s debt an A3 rating, which indicated a low credit risk.

A major problem, Moody’s said, is an estimated $37 million operating loss for the university-owned hospital in the fiscal year that ended June 30, a result of declining patient admissions and other financial strains. Overall, the university operates on revenue of roughly $840 million a year. Patient service at the hospital in recent years has produced about 30 percent of annual revenue.

More