Moody’s upgrades New Jersey City University’s bonds, places ratings under review for further upgrade

Moody’s Ratings has upgraded New Jersey City University’s issuer and revenue bond ratings to Baa3 from Ba2 and placed the ratings under review for further upgrade. The outlook was previously positive.

In May 2025, the ratings agency upgraded NJCU’s outlook to positive from stable, the first time Moody’s had ever given a positive outlook to the university. NJCU had $205 million of debt outstanding as of June 30, 2025.

Moody’s said the upgrade of the issuer and revenue bond ratings to Baa3 and placement of the ratings under review for upgrade reflects the continued progress towards New Jersey City University’s merger into Kean University, including a signed legislative commitment to the merger from the State of New Jersey as well as ongoing financial rightsizing at NJCU including reducing outstanding debt and stabilizing liquidity. The merger is scheduled to close on July 1, 2026, following the receipt of final accreditation and US Department of Education approvals.

The ratings agency said the Baa3 rating reflects NJCU’s established role as a regional provider of higher education and Hispanic Serving Institution that should continue as the university merges into Kean University (A2 stable) and will operate as Kean Jersey City following the merger completion. NJCU’s leadership continues to execute on strategic plans to improve the financial position of the university by reducing outstanding debt, improving operating performance, and stabilizing liquidity.

As of June 30, 2025, the university reduced debt by nearly $35 million from fiscal 2024, generated a roughly 10% EBIDA margin (when factoring in cash used to defease debt early), and maintained roughly 54 monthly days cash on hand. State stabilization funds totaling $17 million across fiscal 2024 and 2025, additional state funds committed to address the campus’ deferred maintenance, along with oversight from a state-appointed fiscal monitor, further support credit quality.

Under the terms of the merger agreement and the Kean University-New Jersey City University Merger Act, all debts of New Jersey City University shall be transferred to Kean University, and the review period will also focus on the structure, which could include refinancing, restructuring, or amending, of NJCU’s existing debt obligations within the merged university.

Moody’s said further upgrades are contingent on a successful merger of NJCU’s campus into Kean University, benefitting from the combined Kean’s stronger financial resources and student market, strengthening of liquidity and substantial and sustained improvement in operating performance.

The ratings agency said factors that could lead to a downgrade of the ratings include inability to complete or significant disruption in the merger into Kean University and material deterioration of NJCU’s liquidity, beyond the funds utilized for voluntary separation and severance payments.

Gov. Phil Murphy signed legislation Jan. 12 that advances the merger of Kean University and New Jersey City University (NJCU), a significant event in the transformation of public higher education in New Jersey.