Moody's rates Eastern Michigan University bonds A2

Moody's Investors Service said it assigned an underlying A2 rating to Eastern Michigan University's (EMU's) $125.83 million general revenue and refunding bonds, series 2008.

The bonds are being issued as variable-rate demand obligations.

The bonds are expected to be sold on April 9.

The series 2008 bonds will be supported by an irrevocable direct pay letter of credit issued by Dexia Credit Local, and Moody's said it expects to assign a rating to the bonds based on the letter of credit upon review of the documents. At this time, Moody's has also affirmed the underlying rating on the University's outstanding debt.

The outlook is revised to negative from stable reflecting Moody's concern over the University's weakened operating performance driven by constrained state support and declining student enrollment; substantial additional borrowing plans; significant turnover of senior administration; and a debt structure that adds operational and liquidity risks.

Bond proceeds will be used to refund the university's series 2001 and series 2006A bonds, both of which use insured floating-rate debt structures.

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