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S&P Global Ratings affirms strong issuer credit rating for Fayetteville State University

By Staff Report, posted Jun 18, 2024 on BizFayetteville.com

S&P Global Ratings has recently affirmed its 'A-' issuer credit rating (ICR) and the 'A-' rating on Fayetteville State University’s (FSU) outstanding general revenue bonds (GRBs) issued by the University of North Carolina Board of Governors (BOG). At the same time, S&P Global also affirmed the 'BBB+' underlying rating on the FSU Housing, LLC’s outstanding limited obligation bonds issued by Fayetteville State. Such ratings are a factor in interest rates when institutions and governments borrow money. This action further confirms the University’s improved fiscal stability and steady growth.

“We continue to work closely with our partners in the UNC System and state government to further strengthen FSU’s financial foundation and fulfill our mission to offer a premier education to all who seek it, regardless of their circumstances,” said FSU Chancellor Darrell T. Allison in a  press release. “Our efforts have vastly improved the university’s fiscal health and future stability, further ensuring our commitment to students today and tomorrow. Our upgraded rating, along with this recent affirmation, confirms our continued growth and strength.”

S&P’s assessment pointed to FSU’s core strengths, particularly characterized by experienced senior management that is supported by the UNC System, a healthy and improving retention rate, and recent growth in undergraduate enrollment. FSU’s profile was also bolstered by support from North Carolina (AAA/Stable) for both operations and capital, a significant 45.7percent of total adjusted operating revenue in fiscal 2023, as a result of the state providing additional funds to FSU in lieu of tuition revenue as outlined with the NC Promise. The ICR also reflects the university’s continued ability to meet its financial obligations.

The report also noted FSU’s consistent enrollment growth since joining the NC Promise initiative. Moreover, S&P Global anticipates an increase in demand for the University because of inflationary increases throughout the state.

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