Support The Moscow Times!

S&P Report Envisages University Debt Issuance

Russian universities obtain the bulk of their finances from state funds and tuition fees. Above, the main building of Moscow State University looming above Sparrow Hills.

Leading Russian universities may choose to issue debt to improve their academic infrastructure after gaining greater autonomy under new public sector reforms, Standard & Poor's Ratings Services said in a new report "Will Russian Universities Emerge as a New Class of Borrower?"

The reform granted approximately 30 universities additional managerial and financial flexibility, which could potentially help them increase and diversify their revenues, and so bridge the infrastructure gap to international peers, the report said.

"We believe that the sector could emerge as a new class of borrower on the market," S&P credit analyst Karen Vartapetov said. "Our early estimates suggest that such borrowings could total about $600 million per year."

"We estimate that leading Russian universities currently spend about an average $2,500 per student per year on capital, only half as much as international peers in Britain and Canada. If they were to issue debt to raise this spending to a par with these peers, we calculate that their borrowing would be about 7 percent of their revenues per year," Vartapetov said.

Russian universities currently obtain the bulk of their finances from state funds and tuition fees. The sector might be exposed to tighter funding constraints over the next few years because the current federal budget for 2012-14 implies a cut in spending on higher education by about 10 percent in real terms between 2011 and 2014.

Read more

Independent journalism isn’t dead. You can help keep it alive.

As the only remaining independent, English-language news source reporting from Russia, The Moscow Times plays a critical role in connecting Russia to the world.

Editorial decisions are made entirely by journalists in our newsroom, who adhere to the highest ethical standards. We fearlessly cover issues that are often considered off-limits or taboo in Russia, from domestic violence and LGBT issues to the climate crisis and a secretive nuclear blast that exposed unknowing doctors to radiation.

As we approach the holiday season, please consider making a one-time donation — or better still a recurring donation — to The Moscow Times to help us continue producing vital, high-quality journalism about the world’s largest country.