New Jersey City University received another piece of solid financial news Monday when Fitch Ratings upgraded its Issuer Default Rating to BBB- from BB+ – an upgrade that moves NJCU into investment-grade territory for the first time since its financial challenges came to light in recent years.
Fitch cited NJCU’s “ongoing operational overhaul” and “movement toward structural balance” as key factors behind the upgrade. The agency noted that the university has made progress in stabilizing its financial operations and improving its budgetary performance.
Fitch also placed NJCU on “Rating Watch Positive,” indicating that further upgrades could be possible if the university continues its financial recovery and maintains fiscal discipline.
To be clear, the BBB- rating is the lowest tier of investment-grade, but it represents a meaningful shift from the previous BB+ rating, which was considered speculative. The upgrade is expected to enhance investor confidence and potentially reduce borrowing costs for the university.
The upgraded rating applies to both the university’s general credit profile and the specific NJEFA bonds, which are backed by NJCU’s pledged revenues.
This development marks a turning point for NJCU as it seeks to rebuild its financial reputation and strengthen its position within New Jersey’s higher education landscape.
NJCU President Andres Acebo obviously was thrilled.
“With a historic merger with Kean University on the horizon, this milestone reflects not just fiscal recovery and stability, but a shared vision of renewal, partnership, and purpose,” he said on LinkedIn. “We are deeply grateful to our state’s leadership and partners for investing in our strategic plan and work to renew our mission for its second century. More hard work and difficult decisions lie ahead, but today’s recognition validates what has been endured and reminds us that progress, even in the face of headwinds, is both possible and worth our efforts.”
Such an upgrade was unthinkable back in the summer of 2022, when the school was on the verge of bankruptcy and its president was ousted.
Acebo, who took over as interim president in January of 2023 (he was named its formal president earlier this year), helped the school address its budget deficit and enrollment concerns.
The university has implemented a series of cost-cutting measures and strategic reforms aimed at restoring long-term stability. And while the current rating upgrade is based on the recent improvements at NJCU as a standalone institution, the Rating Watch Positive is due to NJCU’s signing on Oct. 1 of a definitive merger agreement with Kean University.
Subject to approvals required for the merger that management expects by the end of summer 2026, NJCU will become an additional location of Kean, and Kean will assume all NJCU assets and liabilities.
In addition to the IDR upgrade, Fitch also raised the ratings on approximately $144.9 million in outstanding bonds issued by the New Jersey Educational Facilities Authority on behalf of NJCU. These include bond series 2007F, 2010G, 2015A, 2016D, 2021A, and 2021B.
Acebo stressed the upgrade was a team effort.
“I’m grateful to every hand, heart, and voice that helped rebuild this foundation and reimagine its future during one of the most challenging eras in higher education,” he wrote.
