Religious affiliations of colleges and universities can have an indirect positive or negative impact on credit quality, Standard & Poor's Corp. said Monday.

The rating agency said in CreditWeek Municipal that "while a religious tie is not, in and of itself, a credit determinant, such a relationship can afect credit factors like student demand, revenue diversity, and spending flexibility."

Although the colleges and universities can have "credit characteristics" that come from their religious affiliations, Standard & Poor's said that specific religions and the credit features of religious orders are not subject to its credit analysis.

Positive effects could include financial support from religious entities, but a reliance on a single group of students or a specific stream of gift revenue could lead to negative credit implications, the agency said.

"Rather, the positive and negative impacts of religious affiliation are evaluated within the larger demand and financial framework of an institution," the agency said.

Colleges with religious affiliations are subject to the same basic rating analysis of non-religious higher education institutions that focuses on demand, financial operations, management, and debt structure, Standard & Poor's said.

"It is within this context that [Standard & Poor's] assess the impact of religious affiliation on enrollment, revenue diversity, and spending flexibility," the agency said.

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