Virginia.

Moody's Investors Service upgraded the University of Virginia's rating to Aal from Aa last week, which Moody's said places the institution among the nation's highest-ranked public colleges and universities.

Last Wednesday's upgrade applies only to the university's general revenue pledge bonds and not to the University of Virginia Medical Center hospital revenue bonds, which are rated As, or state bonds, Moody's said.

In a release, the rating agency praised the university's "superior student quality and highly selective admissions," as well as strong student demand for admission. The university has raised tuition and reduced expenditures in response to recent cuts in state appropriations, and it has maintained a diverse revenue base, Moody's said.

"The financial condition of the university provides very strong security for debt as successful fund-raising campaigns and conservative fiscal practices have led to accumulation of a substantial endowment," Moody's said.

The university's biggest revenue component is generated by the medical center's patient care. Other revenue sources include state appropriations, tuition and fees, grants and contracts, private gifts, and auxiliary enterprises, the rating agency said.

Moody's expects the university's debt service to stay manageable and projects "relatively minor capital needs."

-- Martha M. Canan, Washington

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