Standard&Poor's Ratings Services affirmed its 'AA' long-term rating and underlying rating (SPUR) on the University of Southern California's (USC) outstanding debt. The outlook on all ratings is stable. The 'AA' rating reflects our view of the university's strong demand and student metrics, impressive fund raising capacity, and operating performance, which are partly offset by an increased appetite for debt in recent years and the performance of two recently-acquired hospitals from Tenet. These hospitals are not currently profitable, nor are they expected to be for a few years. This, combined with our expectation of compressed healthcare margins throughout the sector during the next few years with the onset of reform, limits USC's upward rating potential at this time as
