With borders likely to stay closed this year and “a souring” relationship with China Standard and Poor’s is negative on HE

However, the agency suggests universities have addressed the present, and to come loss of international student income, by cutting costs and in some cases, raising debt.

S&P states that of the four Australian universities which it reports,

* University of Wollongong issued $350m in December, “the funds are needed in relation to a student accommodation public-private partnership that has become uneconomical because of COVID-19”

* last year UNSW drew on $250m from banks “to shore-up liquidity” and,

* ANU plans to borrow $243m

Among other universities, Charles Darwin U, CQU and James Cook U took up loans backed by the Commonwealth’s Northern Australia Infrastructure Facility.

While S&P warns cash and investment coverage of debt should be treated with caution as a measure it identifies 2o plus universities with a “particularly sturdy” coverage of 3x or greater. Those with way less coverage include, UTS, Monash U, Macquarie U, RMIT and La Trobe U.

System –wide S&P predicts “key-credit drivers” for 2021 are,

* borders staying closed, although small numbers of international students could return through safe corridors

* lower Commonwealth Grant Scheme funding for some student places, which will place a “greater burden” on other revenue streams, such as tuition fees

* balance sheet “strain”. “Some universities will raise debt, sell assets or draw down on financial resources to bridge their budget shortfalls”

* Chinese students choosing to study in other nations

* prestigious universities will attract strong student demand but “lower-tier” institutions could struggle to retain market share

“If there’s a silver lining, it is that the crisis has shown universities have substantial flexibility to respond to ups and downs,” S&P suggests.