Amherst’s AAA Is Stable

Standard & Poor’s last week revised gilt-edged Amherst College’s outlook to stable from negative due to an improvement in the school’s liquidity.

While Amherst’s expendable resources have dropped from historical highs in fiscal 2007, they have increased modestly as of June 30, 2010.

The AAA-rated college has reduced spending, postponed capital projects, and boosted student headcount to a new target average of 1,770, while unrestricted net assets in fiscal 2010 increased by $22.8 million, according to a Standard & Poor’s report.

“The stable outlook reflects our expectation that over the next 24 months, Amherst will likely continue to experience impressive demand, produce strong operating results, and maintain levels of liquidity and financial resources that are consistent with the rating category,” analyst Mary Peloquin-Dodd said in the report. “We also expect any additional debt to be commensurate with an increase in financial resources.”

Amherst’s fundraising efforts tend to be strong. The college kicked off a comprehensive capital campaign in the fall of 2008, with a goal of reaching $425 million. It has raised more than $380 million to date, and officials anticipate hitting the $425 million goal ahead of schedule.

The school’s endowment is $1.38 billion as of mid-2010, and its active alumni total more than 20,900, according to its website. The private liberal arts college was founded in 1821 is located 90 miles west of Boston. Its fall 2010 undergraduate enrollment was about 1,794. Amherst has $315 million of outstanding debt, most of it variable-rate, as of June 30, Standard & Poor’s said.

Moody’s Investors Service rates Amherst Aaa with a stable outlook. Fitch Ratings does not rate the credit.

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