Lancaster University

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University's credit rating raised following refinancing deal

06/12/2007 15:45:17

Lancaster University has had its credit rating raised to 'A' from 'A-' by Standard & Poor's Ratings Services.

Standard&Poor’s raised Lancaster’s long-term issuer credit rating on June 11th following the refinancing and extension of the University’s accommodation project.

Lancaster is one of only a few UK universities to have a public credit rating.

The new rating reflects the university's underlying strengths its reputation for teaching and research, consistent overall student demand, and strong financial performance relative to its peers.

The changes to the accommodation project have involved the refinancing of existing debt, the construction and operation of a further 962 rooms, and the extension of the project company's lease by 10 years. As a result, the university has received an upfront payment of £5 million from the project company.

Other factors which help the credit rating include Lancaster’s solid reputation for teaching and research across a wide range of courses. and academic infrastructure projects which have now been completed, most recently the third phase of the Lancaster Environment Centre, which increases the university's capacity to meet growing postgraduate demand.

Total income continued to grow strongly in financial 2005/2006, rising to an overall surplus of 3.9% of total income, which is strong for the sector. The university's forecasts show a lower surplus in financial 2006/2007, partially due to increasing staff costs, followed by rising surpluses in future years, as the income from higher tuition fees has its full effect. The forecasts also show that direct debt levels are set to fall consistently, from an already low 28.3% of total income at financial year-end 2006.