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Harvard flat endowment return bodes ill for spending-Moody's

Monday, 1 Oct 2012 | 11:00 AM ET

Oct 1 (Reuters) - Harvard's flat re turns on its $30.7 billion endowment, the largest of any educational endowment in the world, is credit negative for the Boston-based university as it is for other endowment-dependent universities, Moody's investors service said on Monday.

According to the rating agency last week Harvard, which is rated AAA, announced r eturns of minus 0 .05 percent for fiscal 2012 ended in June. This underperformed key competitors such as Yale University which had a 4.7 percent return and the Massachusetts Institute of Technology, whose endowment returned 8 percent.

"These results are credit negative for Harvard and other endowment-dependent universities, particularly those rated Aaa and Aa, which typically spend 4 percent-6 percent of their endowment annually to fund 20 percent - 50 percent of their operating expenses," the Wall Street agency wrote.

Moody's said that a weak performance for one year is not putting pressure on credit ratings but it may affect spending decisions.

"Modestly declining endowment values are credit negative for colleges and universities, especially in light of families' reduced ability pay higher tuition fees".

(Reporting by Tiziana Barghini; Editing by Chizu Nomiyama)

((Tiziana.Barghini@thomsonreuters.com)(+1-646-223-6312)(Reuters

Messaging: tiziana.barghini.thomsonreuters.com@reuters.net))

Keywords: UNIVERSITIES HARVARD/MOODYS

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