Moody’s Investors Service downgraded $61.5 million of bonds sold on behalf of John Carroll University to A3 from A2. The Ohio Higher Educational Facility Commission issued the debt on behalf of the school.
John Carroll is a small, private Jesuit university located in University Heights in the Cleveland area.
“The downgrade is driven by sustained pressure on the university’s primary revenue source, student charges, which comprise more than 70% of the university’s operating revenue, a low and declining net tuition per student coupled with a high selectivity rate, signaling pressure on demand,” analyst Erin Ortiz wrote in a report.
Moody’s revised the outlook to stable from negative at the lower rating.
About 85% of the school’s debt is in a fixed-rate mode, Moody’s said. It has two swaps hedging its outstanding variable-rate bonds, including one with PNC Bank that was entered into on June 1 to hedge its interest exposure on a $3 million variable-rate loan from the bank.
The school’s tuition was $12,869 in fiscal 2010 compared to a 2010 median of $19,068 for Moody’s small A-rated institutions.
