Letter to the editor: Professor Emeritus speaks on Rider’s rocky relationship with Moody’s Investors Service
By Gerald D. Klein
It was good to see The Rider News reporting on Rider ending its relationship with Moody’s. This is information that the wider Rider community deserves to have, including alumni, friends, retired staff and faculty.
The series of four downgrades by Moody’s, culminating in Rider’s basement borrower’s rating of Caa1 – its bonds non-investment grade, having “junk bond” status – is as significant as it is shocking. As Moody’s has reported, the sequential downgrades reflect Rider’s continual failure to achieve its announced goals and the persistence of financial instability.
Rider has turned to Standard & Poor’s borrower rating system. Here, the university has a BB rating, equivalent to a Moody rating of Ba2, as The Rider News reports – five levels higher than Moody’s Caa1 rating. This certainly can be seen as a case of shopping for a better reputation.
Nevertheless, The Rider News article also reports that the S&P BB rating reflects that Rider bonds will continue to be non-investment grade or of “junk” status.
I believe that Rider abandoning Moody’s occurred because the university’s leaders were also stung by Moody’s pointed criticism of the university’s leadership – its board, president, and top management team.
In explaining its January 30, 2024 downgrade of Rider to a Caa1 bond rating, Moody’s wrote: “Governance considerations are a key driver of this rating action, including financial strategy and risk management as well as management credibility and track record.”
The criticism leveled at university leadership was a first for Rider and certainly something the university’s leadership would not want repeated and so public.
Gerald D. Klein is a Professor Emeritus of organizational behavior and management
