Credit agency gives the all-clear

July 7, 2000

Lancaster University has hauled itself back from the brink of bankruptcy and is now judged financially stable by a leading credit rating organisation.

Standard & Poor's said this week that the outlook for the university was positive and assigned it a rating of triple B plus.

"The rating reflects the impressive recovery from the financial problems of four years ago," said analyst Robert Robinson.

The recovery was a result of Lancaster's academic and research reputation and the strength of its new management team, which has undertaken a programme of administrative restructuring and cost reductions with tight budgetary controls.

Just four years ago, Lancaster was facing crippling debts as a result of over-ambitious expansion plans funded by a Pounds 35 million debenture.

While the new rating is generally positive, Standard & Poor's analysis shows the university is still a victim of high debt-servicing costs. Lancaster said it was determined not to get into any more debt and will look towards the private finance initiative to generate future capital.

Lancaster is the third UK university to be given a public Standard & Poor's credit rating. It is an assessment of its reputation, research base, demand profile, financial performance, debt position and management.

For example, the lower an institution's acceptance rate (offers to applications) and the higher the matriculation rate (acceptances to offers), the more admissions flexibility it is judged to have.

Given the "dynamic environment" universities are operating in, Standard & Poor's also assesses their ability to foresee and plan for potential challenges.

"Strong leadership, strategic focus and good balance between the academic and administrative functions of the university are key ingredients in effective university management," it says.

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