Research: Rating Action: Moody’s downgrades New Jersey City University (NJ) to Ba2; negative outlook

New York, September 21, 2022 — Moody’s Investors Service has downgraded the issuer and revenue bond ratings of New Jersey City University (NJ) from Ba2 to Ba1. The bonds were issued through the New Jersey Educational Facilities Authority (NJEFA). Total debt outstanding for fiscal year 2021 was $148 million. The outlook has been revised to negative based on the ratings under review. This concludes our rating review which began on July 15, 2022.


The issuer’s rating downgrade reflects New Jersey City University’s (NJCU’s) current and projected significant structural financial imbalance, which risks depleting unrestricted liquidity in fiscal year 2023 unless action is taken. compensatory budgets. Preliminary unaudited information for fiscal year 2022 shows a significant operating deficit leading to a reduction in cash to less than 30 days of cash. Management has declared a financial emergency and is taking action under its fiscal year 2023 budget to adjust spending. Returning to financial stability in the near term will prove difficult given the size of the projected deficit, projected continued declines in enrollment, an inflationary environment and labor constraints. The university focuses on obtaining additional support from the state and other external sources; the negative outlook reflects that the outcome of these efforts is still very uncertain. Without a timely injection of cash, the university’s credit quality is likely to deteriorate further.

Governance considerations are a key driver of this rating action. An aggressive financial strategy and poor risk management contributed to the financial crisis facing the university. With the very recent turnover in senior management, as well as changes in other key administrative positions, the current management team has not yet had time to establish a balance sheet to fully address the significant financial challenges of the company. university or implement improved risk management practices. However, current leaders are keenly focused on resizing operations to align with long-term macroeconomic demographics, as evidenced by the recent implementation of increased conservative and transparent budgeting practices.

The Ba2 rating is currently supported by the university’s role as a public university and Hispanic Service Institution (HSI) for the State of New Jersey (A2 stable), playing an important access role for a student population diverse undergraduate and graduate courses. With its mission and position as the only public university in Hudson County, we expect the state to take steps to ensure the viability of the university, although the scale, timing and form of such action are speculative and uncertain.

Ba2 revenue bond ratings incorporate university issuer-level credit characteristics and general obligation to pay, with a pledge of first lien on tuition and fee revenue.


The negative outlook reflects the severity of further cash flow and liquidity losses for FY2023 absent significant spending cuts and external financial support. There is also an increased risk of a one day free cash breach of a commitment that begins on June 30, 2023.


– Substantial and lasting improvement in operational performance, which could likely occur through a combination of budget cuts, increased student-generated revenue, and increased state support

– Significant increase in cash, with more than enough headroom for financial commitments – Improved brand and strategic positioning reflected in stronger listing patterns and revenue growth – Over time, deleveraging for a more sustainable debt profile


– Lack of sufficient and timely additional external support, including from the state

– Inability to quickly implement a financial restructuring leading to an improvement in financial performance – Further decline in available reserves; non-compliance with financial covenants


Revenue Bonds are general unsecured obligations of NJCU. Concurrent with the issuance of the Series 2021A and 2021B bonds, the pledges were changed on the new parity bonds to include a first lien on tuition and fee income. In addition, two covenants were added: (1) a covenant requiring the university to set tuition at a price sufficient to cover operating costs and debt service; (2) a liquidity clause that requires the university to maintain 35 days of cash (as defined by the lease agreement) from June 30, 2023. In addition, there is a reserve fund for the service of the debt on the Series 2021 Bonds which shall be maintained at the maximum annual debt service provided, however, the amount shall not exceed the lesser of (i) ten percent (10%) of the original principal amount of the Bonds or (ii ) 125% of the average annual debt service requirement on the bonds. Series 2007F, 2010G, 2015A and 2016D bonds do not have a debt service reserve fund.

If cash days fall below 35 days, NJCU is required to retain the services of a consultant to make recommendations to bring the university into compliance with the undertaking. Events of default under the Master Indenture include non-payment of debt service when due. EODs under the lease agreement with NJEFA include non-payment of lease payments when due; incorrect material representations; failure to comply with required covenants unless all reasonable steps are taken to remedy the breach; and an event of default under the Trust Deed.


New Jersey City University is a public four-year, undergraduate and graduate-level university with multiple locations in Jersey City, NJ, near New York City. The university has approximately 5,900 students, more than 80% of whom are undergraduates, with operating revenue of approximately $162 million in fiscal year 2021.


The main methodology used in these ratings was the Higher Education Methodology published in August 2021 and available at Otherwise, please see the Scoring Methodologies page on for a copy of this methodology.


For details on key rating assumptions and Moody’s sensitivity analysis, see the Methodological Assumptions and Sensitivity to Assumptions sections in the Disclosure Form. Moody’s rating symbols and definitions can be found at

For ratings issued on a program, series, category/class of debt or security, this announcement provides certain regulatory information regarding each rating of a subsequently issued bond or note of the same series, category/class of debt, security or under a program for which ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a media provider, this announcement provides certain regulatory information relating to the credit rating action on the media provider and each particular credit rating action for securities whose credit ratings are derived from the support provider’s credit rating. For the provisional ratings, this press release provides certain regulatory information relating to the provisional rating assigned, and to a final rating that may be assigned after the final issuance of the debt, in each case where the structure and conditions of the transaction n have not changed prior to the final rating being assigned in a way that would have affected the rating. For more information, please see the issuer/transaction page of the respective issuer at

The ratings have been disclosed to the rated entity or its designated agent(s) and issued without modification as a result of such disclosure.

These notes are solicited. Please refer to Moody’s Policy for the Designation and Assignment of Unsolicited Credit Ratings available on its website.

The regulatory information contained in this press release applies to the credit rating and, if applicable, the outlook or rating revision relating thereto.

Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis are available at

At least one ESG consideration was material to the announced credit rating metric(s) described above.

The worldwide credit rating on this credit rating announcement was issued by one of Moody’s affiliates outside the EU and is approved by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main. -le-Main 60322, Germany, in accordance with Article 4(3) of Regulation (EC) No 1060/2009 on credit rating agencies. Further information on the EU approval status and the Moody’s office that issued the credit rating can be found at

The worldwide credit rating on this credit rating announcement has been issued by one of Moody’s affiliates outside the UK and is approved by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the United Kingdom. . Further information on the UK endorsement status and the Moody’s office that issued the credit rating can be found at

Please see for any updates on changes to the lead rating analyst and Moody’s legal entity that issued the rating.

Please see the issuer/transaction page at for additional regulatory information for each credit rating.

Mary Coney
Senior Analyst
Higher Education
Moody’s Investors Service, Inc.
7 World Trade Center
250 Greenwich Street
New York 10007
JOURNALISTS: 1 212 553 0376
Customer Service: 1 212 553 1653

rachel mcdonald
Additional contact person
JOURNALISTS: 1 212 553 0376
Customer Service: 1 212 553 1653

Release Office:
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
JOURNALISTS: 1 212 553 0376
Customer Service: 1 212 553 1653

About Charles D. Goolsby

Check Also

A Tribute to Veterans Day November 2022 | Issue 200 – The Jersey LLC has arrived | Cadwalader, Wickersham & Taft LLP

[co-authors: James Gaudin, Daniel Healy]* On 1 September 2022, the Limited Liability Companies (Jersey) Act …