PHILADELPHIA (AP) — Ratings agency Moody’s Investors Service downgraded Penn State University’s long-term rating to Aa2 from Aa1 because of the expected financial costs from pending lawsuits related to the Jerry Sandusky sex-abuse scandal.
Moody’s announced the change today, saying that the “ultimate cost of future settlements and possible judgments” along with the number of claims would likely be significant.
The decision also reflected what Moody’s called “governance and institutional culture challenges” facing the school but cited Penn State’s movement toward reforms set forth in the Freeh Report.
At least four related lawsuits have been initiated against Penn State, and eight legal teams have surfaced to say they represent more than 20 potential claimants. Penn State recently hired a law firm with the goal of negotiating settlements by the end of 2012.