Standard & Poor's downgrades Penn State's credit outlook
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Pennsylvania State University had its credit outlook revised to negative by Standard & Poor's, which cited financial liabilities tied to Jerry Sandusky, the former coach sentenced Oct. 10 for sexually abusing minors.
The action by S&P, which still rates Penn State debt AA, its third-highest investment grade, trails a similar move by Moody's Investors Service. Moody's said July 24 that its second-highest Aa1 credit level on the school may be cut.
The 68-year-old Sandusky, a former assistant football coach, left the team in 1999. He met the boys he abused through Second Mile, a charity he set up for needy children. Prosecutors said he was a serial child molester who used the group to recruit victims, then plied them with money and trips to Penn State football games.
S&P also cited state funding, tuition costs, declining enrollment and capital needs among the school's challenges. While an upgrade over the next two years is "unlikely," the company said its current rating reflects Penn State's strengths as the state's largest university, strong financial management and low debt levels.
First Published October 16, 2012 12:00 am