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Rutgers Acquisition of Medical Campus Could Result in Credit Downgrade

Two days after Rutgers University’s governing boards signed off on a controversial plan to take over most of the University of Medicine and Dentistry of New Jersey, the university learned that the acquisition might end up being more costly than expected. Late Wednesday, Moody’s Investors Service announced that it was putting $1.3-billion in Rutgers bonds “under review for possible downgrade.” The credit-rating agency said the Aa2 rating on Rutgers’s long-term bonds could be adversely affected by its assumption of $450-million in UMDNJ debt and other expenses associated with the acquisition. The university has growing enrollment and revenue, Moody’s said, but it also faces “a leveraged balance sheet and significant future capital plans.”

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