Credit ratings boosted

一月 31, 2003

The creditworthiness of top-tier, "traditional" universities will improve as a result of last week's white paper, according to ratings agency Standard & Poor's.

But the agency warns that the vulnerabilities of some of the weaker new universities could put further pressures on their credit quality.

S&P publishes ratings for five English universities - Bristol, Nottingham, King's College London, Sheffield and Lancaster - and has assessed the financial health of several others.

The agency says increased funding from higher tuition fees, government-funded research income and endowments represented a positive credit factor.

An increase in the proportion of government-funded research income channelled to the top-tier research universities was likely to reinforce their strong credit position, said Craig Jamieson, S&P's higher education analyst.

But other outcomes were also possible, Mr Jamieson said. Widening student participation could result in a deterioration of the business profile of older universities through lower academic quality.

New universities' existing research income could be replaced by teaching-related income and their demand profile boosted, for example by the introduction of foundation degrees.

Mr Jamieson said: "A gap in the overall credit profiles of established universities and new universities has developed over time, in part due to the higher level of research income by the former, which has enhanced their financial flexibility.

"New universities are likely to see a reduction in research income, which will be replaced by income related to teaching quality (the new teaching academy will promote and reward best practice in teaching), which will concentrate income sources; this is less positive from a credit perspective."

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