Standard & Poor's Ratings Services said it lowered its long-term rating on Abington Township Municipal Authority, Pa.'s series 2005B and 2005C revenue bonds and Pennsylvania Higher Education Facility Authority's series 2007 revenue bonds, both issued for Marywood University, to BB-plus from BBB-minus.
The outlook is stable.
"The downgrade reflects a significant decrease in operating performance in fiscal 2014, which resulted in a violation of the university's debt service coverage covenant," said Standard & Poor's credit analyst Luke Gildner. We understand waivers of the violation have been obtained from the bond trustee and the banks. "The downgrade also reflects consecutive years of undergraduate enrollment declines, the university's weakened financial position and increased reputational risk associated with the loss and subsequent reinstatement of accreditation for its nursing program."
In addition, Marywood issued $20 million of private placement debt in fiscal 2014, which it plans to draw down over the next year further pressuring financial resources.
