Howard University, DC 2011A And 2011B Revenue Bond Ratings Affirmed At 'BBB-' And Removed From CreditWatch

CHICAGO (S&P Global Ratings) Jan. 10, 2019--S&P Global Ratings has affirmed 
its 'BBB-' long-term and underlying ratings on the District of Columbia's 
series 2011A and 2011B revenue bonds issued for Howard University. At the same 
time, S&P Global Ratings removed the ratings from CreditWatch Negative, where 
they were placed Oct. 12, 2018. The outlook is stable.

The rating and stable outlook reflect the university's recent approval and 
receipt of reimbursement funds after its first fall 2018 request from the 
federal Heightened Cash Monitoring 2 (HCM2) status that it has been subject to 
since August 2018. Receipt of this money on a timely basis and anticipated 
further receipt of additional money over the next few months provide 
reassurance of its ability to successfully submit accurate documentation and 
realize timely reimbursement. 

"The rating and outlook also reflect our review of the university's fiscal 
2018 unrestricted financial results, that while negative on a full-accrual 
basis, remain adequate to support the rating given the university's sizable 
endowment," said S&P Global Ratings credit analyst Jessica Wood. 

The 'BBB-' rating reflects our view of Howard's strong enterprise profile and 
adequate financial profile, including its position as one of the oldest and 
most prestigious historically black college and universities with a wide array 
of program offerings and diverse revenues, and steady demand. However, 
consolidated operations have fluctuated in recent years, from a slight surplus 
in 2017 when including one-time income related to defeased bonds, to a slight 
deficit in 2018 (based on unrestricted operations only). Operational stress is 
somewhat offset by the university's significant endowment and adequate 
financial resource ratios for the 'BBB' category, with cash and investments of 
$761.5 million at June 30, 2018, equal to 84% of adjusted expenses (including 
financial aid) and 161% of debt. Combined with the university's HCM2 status 
and recent events, these credit factors lead to a 'bbb-' indicative 
stand-alone credit profile and 'BBB-' long-term rating. 

The stable outlook reflects our assessment of Howard's and the Howard 
University Hospital's consolidated weak operations and lack of consistently 
stable operations, offset by adequate financial resources for the rating. 

We could lower the rating during our two-year outlook period should Howard not 
maintain its more recent healthy enrollment profile, operating performance or 
financial resources deteriorate, or the university issues additional debt 
without an improvement in operating margins and liquidity. 

Given the weak operating performance, only adequate balance-sheet metrics, and 
recent HCM2 status, we do not expect to raise the rating over the outlook 
period. We would view consistent, improved operating results and surpluses 
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