Moody’s affirms UBC’s Aa1 rating and S&P lowers its rating to A+ due to provincial credit link

As a requirement of issuing and having publicly traded debt outstanding, UBC is required to maintain a credit rating. A credit rating is an independent evaluation and forward-looking opinion of UBC’s financial health and overall creditworthiness, particularly in repayment of the debt outstanding. A higher rating indicates greater financial stability, which helps build trust with external stakeholders and improves access to capital, and comparing credit ratings of different companies provides investors with a sense of relative potential default rates of a particular bond or debt security.

UBC maintains credit ratings with two different rating agencies, Moody’s Investors Service (commonly referred to as “Moody’s”) and S&P Global Ratings (“S&P”).  While their scales are roughly similar, Moody’s uses both letters and numbers in their ratings while S&P uses all uppercase letters with plus or minus symbols.  Moody’s credit ratings range from Aaa (AAA under S&P) which implies obligations of UBC are of the highest quality and minimal risk, to C (D under S&P) which implies obligations are typically in default with little prospect for recovery of principal and interest.

Each year Moody’s and S&P meet separately with UBC to assess the factors influencing the university’s credit rating. This includes, but is not limited to, an overview of UBC’s strategic objectives, governance structure and executives, our financial results and projections for future years, student enrolment numbers and trends, capital projects, government funding, research funding, fundraising and even environmental, social, and governance (ESG) efforts. 

On April 3, S&P re-affirmed UBC’s stand-alone credit profile at aa+, citing the UBC’s extremely strong market position, strong operating margins and high levels of liquidity while maintaining a modest debt burden. However, UBC’s long-term issuer rating was lowered to A+ due to its strong financial and governance relationship with the Province of British Columbia, which S&P recently downgraded.

On April 16, Moody’s affirmed UBC’s Aa1 rating. The rating underscores UBC’s solid financial foundation, strong student demand and strategic management practices, enabling the university to continue advancing our mission of delivering world-class education and research while earning the confidence of our stakeholders. This is the highest rating among all universities in Canada and implies that our debt obligations are of high quality and are subject to very low credit risk.