Moody’s Investors Service has lowered its rating on $83.9 million of revenue bonds issued by the University of Central Arkansas to A3 from A2 and put the credit on the watch list for further downgrades.
Located in Conway, about 30 miles north of Little Rock, the university has a total of $93.8 million of rated debt. Moody’s also assigned A3 ratings to the three series of revenue bonds issued in 2006 that were previously rated on the basis of bond insurance with Ambac Assurance Corp.
Moody’s analysts said UCA had a net cash and investment position of negative $2.6 million, based on preliminary information for fiscal 2008.
“This represented a $5.2 million decline from the prior year in the net position,” the report said. “The weakened cash position was brought on by unfunded scholarship spending, increase in student accounts receivable, capital investments, as well as a series of one-time charges such as losses from litigation.”
Student accounts receivable grew 23% in fiscal year 2008 to just over $7 million, the report said.
