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MSU credit rating lowered over Nassar lawsuit risk

May 4, 2018

Credit MSU

The effects of the Larry Nassar saga at Michigan State University are being felt as far as Wall Street.

The Wall Street rating firm Moody's Investor Services has downgraded MSU's long-term debt rating.

That's due to worries over the potential financial ramifications of a number of lawsuits the school is currently facing.

The action dropped MSU from an Aa1 rating to an Aa2 rating on roughly $975 million in debt.

Aa2 is the third highest credit rating that Moody’s assigns to fixed-income securities like bonds.

The higher the rating, the more likely the issuer is to meet its financial commitments – and the lower the risk of default.

The change “reflects our view of the heightened financial risk from the growing number of lawsuits related to sexual abuse claims” related to Nassar, the firm said in a report.

The firm says the school could get an upgrade if the claims can be settled quickly with "modest impacts to overall wealth and liquidity."