Standard & Poor's Ratings Services said it lowered its underlying rating three notches to BB from BBB on North Dakota State Board of Higher Education's series 2010 taxable housing and auxiliary facilities revenue bonds (recovery zone economic development bonds [RZEDBs]), issued for Williston State College.
The outlook is stable.
"The downgrade reflects our view of WSC's fiscal year-end 2014 (unaudited financials as of June 30) operating results for its housing and auxiliary facilities system," said Standard & Poor's credit analyst Shivani Singh, "with substantially weakened debt service coverage (DSC)."
The weaker DSC was at 0.59x in fiscal 2014 relative to 1.17x coverage in fiscal 2013 (excluding the RZEDB federal subsidy pledged to bondholders, which is excluded from S&P's calculations given their uncertain amounts and timing). The weak operating performance of the housing and auxiliary facilities system in fiscal 2014 is due to revenue decreases that were substantially lower than management's projections.
