Ratings agency Fitch has announced that Lincoln, Somerville and St Peter's have all had their credit ratings downgraded from the coveted AAA ranking to AA+. The change in rating reflects the fact that, apart from in extremely rare circumstances, publicly-funded bodies cannot have a higher credit rating than the state that backs them.
Fitch announced the downgrades, which it also applied to the likes of the Bank of England and Transport for London, last week. The news follows the recent downgrade of the UK’s own credit rating from AAA to AA+ — something that the current Chancellor of the Exchequer, George Osborne (Magdalen College, 1990) had fought hard to retain.
Ahead of the 2010 general election, Osborne wrote in the Conservative manifesto that the party would “safeguard Britain's credit rating with a credible plan to eliminate the bulk of the structural deficit over a parliament."
However, earlier this month Fitch felt it had to downgrade Britain’s rating by a single notch, citing a “weaker economic and fiscal outlook”. That outlook was based on the fact that Fitch expects the UK GDP not to reach its 2007 value again until 2014. According to the agency, that underscores “the weakness of the economic recovery” of the country.
The loss of the highest credit rating may see the Oxford colleges face higher borrowing costs. Sadly, their credit rating has to be equal or lower than the state that backs them — regardless of their assets. As of July 2012, St Peter’s held funds of £30 million, Somerville £54m and Lincoln £85.7m.