By: Donald V. Watkins
Copyrighted and Published on February 5, 2024
EXCLUSIVE BREAKING NEWS ---
Moody’s is a global integrated credit rating agency. On December 22, 2023, Moody’s quietly de-listed Birmingham Southern College (BSC) as a credit rated institution.
Today, BSC has no Moody’s credit rating whatsoever. Moody's withdrew it on December 22nd.
The de-listing occurred AFTER Moody’s formally placed BSC under a special review of its credit rating on November 21, 2023, due to a lack of sufficient information.
Yet, on November 28, 2023, the city of Birmingham awarded BSC a whopping $5 million loan to stay open for the Spring of 2024.
Furthermore, the city’s $5 million loan was awarded AFTER Alabama State Treasurer Young Boozer, III, denied BSC a $30 million loan in October 2023 under Alabama's newly passed Distressed Institutions of Higher Learning Revolving Loan Fund Act (2023).
Prior to the December 22nd de-listing of BSC, Moody’s rated BSC as “Caa2,” which is the equivalent of a junk bond. (Moody's defines Caa-rated obligations as those that “are judged to be of poor standing and are subject to very high credit risk.”)
In Moody's Investors Service's ratings system, securities are assigned a rating from Aaa to C, with Aaa being the highest quality and C the lowest quality.
News of BSC’s de-listing has been quashed in the state’s legacy news media. In fact, these news media organizations have been supportive of the loans sought by BSC, as evidenced by their numerous "old glory" stories on BSC and editorial opinions.
No government agency in the history of Alabama has loaned taxpayer money to a private educational entity with a “Caa2” Moody’s junk bond credit rating.
Now, $5 million in Birmingham taxpayer dollars is completely exposed to the full range of the credit risks of BSC, a de-listed Moody’s borrower.
For all practical purposes, the city's $5 million is gone. City of Birmingham taxpayers are left holding a bag full of empty promises from an institutional borrower whose ability to repay this $5 million debt died a long time ago.
At this juncture, it is impossible to save BSC.