Cornell has announced that it will fund a new facility on its Weill Cornell Medical College campus in New York City as an investment in biomedical research.

Meanwhile, the university is taking advantage of historically near-low interest rates to rebalance its current debt portfolio, said Cornell Vice President for Finance Joanne DeStefano.

"I am very pleased that Standard and Poor's reaffirmed the university's 'AA' credit rating, and Moody's maintained its 'Aa1' credit rating assignment, the second highest possible. While our financial ratios indicated that we could have been dropped a notch, Moody's recognized the positive steps the university has taken to bring us back to financial equilibrium," said DeStefano.

However, on April 8, Moody's downshifted Cornell's outlook to "negative" from "stable," the same outlook it has assigned to higher education in general. Rating outlooks are opinions regarding the likely direction of an issuer's rating if conditions continue or worsen.

A negative outlook does not mean that Cornell's rating will drop, DeStefano said. "Moody's indicated that we need to continue to improve our operating performance, maintain our student market demand and preserve our investment performance and fundraising position compared to similarly rated peers to maintain our current rating. The university is confident that we have a fiscal strategy in place to sustain our Moody's rating for the future," she said.

She went on to point out that the new Medical Research Building is the centerpiece of Weill Cornell's current strategic plan, and it is central to advancing the college's tripartite mission of education, research and clinical care.

By greatly expanding laboratory space, the new 16-floor facility will enable the medical college to recruit and retain the best faculty and the brightest students -- all dedicated to pioneering investigations in cancer, cardiovascular disease, Alzheimer's and pediatrics, among other areas, DeStefano said. Designed with an open floor plan, the building will encourage interdisciplinary research, including with Cornell's Ithaca campus. And its proximity to the Weill Greenberg Center, Weill Cornell's new award-winning ambulatory care facility, will foster translational research aimed at advancing patient care, she said.

The building's initial cost of $650 million and subsequent expenses will be funded by donations to the medical college and debt financing. More than $360 million in philanthropy already has been raised. The building is scheduled to open in July 2013, DeStefano said.

Cornell is rebalancing its debt portfolio, she said, by converting approximately 50 percent of its tax-exempt variable-rate debt to fixed-rate debt and eliminating the associated interest rate, tax, basis and liquidity risks. In addition, the university is contemplating terminating up to 30 percent of its swap portfolio that was put in place over the past few years to hedge against rising interest rates, DeStefano said. Since that time, the university has re-evaluated and reduced a portion of its proposed capital financing program as part of a more comprehensive strategic and financial re-evaluation across the university, termed "Reimagining Cornell."

"All of these actions were viewed as positive actions by the rating agencies," DeStefano said. "The university is prudently taking advantage of current market conditions to reduce risks in our debt portfolio, and we believe the recent credit ratings reflect our actions," she added. "The goal is to complete the transactions by the end of the fiscal year."