If so, the move smacks of desperation, and it’s not going to work.

The Moody’s story

This story appeared in today’s Mercury:

The Moody’s document referred to was a credit rating update for UTAS issued by Moody’s on 4 September 2023.

While I have copies of previous Moody’s rating documents and related Moody’s documents (links to all of these provided at the end of this blog), I have not yet been able to obtain a copy of the 4 September 2023 document. I requested a copy of this document from both UTAS and Moody’s today.  UTAS declined to provide the a copy.  I will keep readers informed about Moody’s response.

I make the following points about the Mercury article:

  • It is not attributed.

  • The question must therefore arise as to whether it was a ‘plant’ by UTAS and/or the State Government. Certainly, the story is highly unbalanced in the way it treats Moody’s as an authority (see the next section).

  • I received letters from UTAS Council members today, including from Chancellor Watkins, referring to Moody’s rating of UTAS. I believe that this is more than a coincidence, and I will have a lot more to say about these letters in my next blog post.

  • The quote from Moody’s rating document and other references to Moody’s in the Mercury story are highly selective. Moody’s rating update of September 2022 for UTAS was 14 pages long (12 of substance). I expect that the September 2023 document would be of similar length. As UTAS is a Tasmanian public organisation, the public have a right to see Moody’s latest rating document in full, rather than someone’s spin.

Moody’s authority is highly questionable

Why, after their contribution to the 2008 Financial Crisis, anyone would place much store on the opinions of ratings agencies I do not know. However, they seem to and, this being the case, I believe regulators should be alert to obvious ‘howlers’ in ratings documents, which should then be subject to correction and – if appropriate – penalties.

I wrote at length about what I regarded as errors in Moody’s initial ratings documents in my blog post UTAS’ Green Bond rating raises major issues and since then I have regularly commented on discrepancies between the words of UTAS, the Tasmanian Government, Moody’s and the facts.

Without a copy of Moody’s 4 September 2023 rating update before me, I will limit myself to stating/restating three main points based on previous Moody’s ratings documents. If Moody’s has corrected or addressed these points in its 4 September 2023 document, I will gladly publish the relevant section of the new Moody’s rating.

(1) Moody’s has consistently asserted the State Government’s strong oversight of UTAS, eg;

“[UTAS’] credit rating outlook is stable, reflecting the strong institutional framework and high levels of oversight by the state of Tasmania and Commonwealth governments.“ (Moody’s rating update of September 2022)

Yet the State Government constantly asserts it has no “oversight” role.

I am in dialogue with a number of Commonwealth agencies but have seen no evidence of strong financial oversight and certainly no indication that the Commonwealth has a clue regarding the soundness or otherwise of UTAS’ Hobart CBD relocation plan.

(2) Moody’s has consistently indicated that the Commonwealth would support UTAS if it ran into financial trouble, eg:

“University of Tasmania’s ratings combine: (1) a baseline credit assessment (‘BCA’) of a1, and (2) a high likelihood of extraordinary support from the Commonwealth in the event of acute liquidity stress.” (Moody’s rating update of September 2022) [my bolding]

In fact, Moody’s, the Tasmanian Treasurer, Michael Ferguson, and the Tasmanian Treasury all seem to assume the Commonwealth would ‘bail out’ UTAS if required (that is, there is an implicit Commonwealth guarantee).

I challenge any of these three parties to obtain this in writing from the Commonwealth now. If they cannot, they should stop making this irresponsible and, I believe, totally incorrect claim.

(3) Previous Moody’s documents have failed to address the questions of whether:

  • UTAS’ CBD relocation plan (including its building cost estimates) is sound.

  • UTAS has complied with the terms and conditions of the Treasurer’s borrowing approvals on which it relied for its $350 million Green Bond borrowing.

In the absence of independent analysis of these issues in its rating update of 4 September 2023, Moody’s rating is worthless.

Transparency

I have made a point of providing my source documents for every claim I have made in my blog posts.  If people want to disagree with me, they have the basis for doing so.

It’s about time others started providing similar levels of transparency.

Here are some suggestions:

The Mercury – tell us who wrote the story at the start of this blog post (and also try to provide some balance next time; don’t treat a Moody’s rating like it is holy writ – it’s not).

Moody’s – publicly release the 4 September 2023 ratings update for UTAS.

UTAS – release the Deloitte Access Economics (DAE) research (supposedly) updating the Southern Future Business Case (SFBC) – the SFBC being the basis for the UTAS Council’s decision on 5 April 2019 to relocate to the Hobart CBD. This should be a minimum in light of the content of Chancellor Watkins letter to me today (more on this in my next blog post).

Treasurer/Treasury – release all advice on UTAS’ financial situation, its CBD relocation plan and whether UTAS complied with the terms and conditions of the Treasurer’s borrowing approvals on which it relied for the $350 million Green Bond borrowing.

Moody’s documents

I have commented on various Moody’s documents in various posts, but here are the documents I have that are relevant to UTAS in one place:

21 February 2020 – Moody’s Government-Related Issuers Methodology

4 August 2021 – Moody’s Higher Education Methodology

10 December 2021 – Moody’s assigns first-time Aa2 rating to University of Tasmania

24 February 2022 – Moody’s assigns first-time provisional rating to University of Tasmania’s AUD debt issuance programme

14 September 2022 – Moody’s University of Tasmania: Update to credit analysis

23 November 2022 – Moody’s announces completion of a periodic review for a group of Higher Education issuers

By : Robert Hogan