UW, Seattle, Bellevue Face Credit Warnings

Sharon Rieger's picture
Friday, July 29, 2011

The stalemate in Congress over how to raise the national debt ceiling may have an immediate local impact in Washington state, as a key ratings agency warned Thursday that the University of Washington and the city of Seattle face possible credit rating downgrades.

Moody's Investors Service said the UW could lose its top-notch "Aaa" rating if the federal government's standing also falls. The warning reflects UW's large share of revenues from federal research grants, along with Medicare and Medicaid reimbursements.

"Our review in the event of a U.S. government downgrade would focus on UW's ability to maintain balance sheet reserves and operating cash flow while reducing expenses or increasing revenues in response to potentially significant federal funding cuts," said John Nelson, managing director for health care, higher education and not-for-profits at Moody's.

The ratings agency also listed 162 local governments for possible downgrade, including Seattle, Bellevue and King County. School districts in King County were also placed under review.

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