Moody’s Investors Services changed its outlook from positive to stable on $100 million of fixed-rate revenue bonds that Chapman University, a private school in Orange County, plans to issue.

The agency assigned an A2 rating to the new issues and affirmed an A2 rating on previous debt, but analysts said in a report that the outlook reflects a substantial increase in balance sheet leverage with a thin financial resource cushion relative to debt.

The university will have $181.3 million of pro-forma debt if it goes ahead with its planned construction of Filmmaker’s Village, a $65 million project, and a bankruptcy court accepts its offer of $50 million for the bankrupt Crystal Cathedral.

Chapman, which boasts enrollment of 11,612 students, is expected to sell $95.3 million worth of private university revenue bonds on Sept. 22. The debt will be issued through the California Educational Facilities Authority.

The A2 rating reflects the school’s strong market position as the only private comprehensive university in Orange County, along with consistently strong operating cash flows that are offset by high pro-forma debt from both a balance sheet and operating leverage perspective, the rating report states.

Analysts said the stable outlook reflects expectations of continued strong operating cash flow and that Chapman will be able to sustain its student market position through growth in enrollment. The report also said analysts are anticipating that the large construction projects will be managed carefully.

If the proposed acquisition of the Crystal Cathedral is approved, Moody’s analysts said they will also assess the impact of the purchase, including the sources of financing on the university’s credit profile.

The fixed-rate bonds will be issued with a final maturity in 2031. The variable-rate bonds are supported by letters of credit from Bank of America NA, but are on review for possible downgrade.

The proceeds will be used to refund $14.3 million of variable-rate bonds and to construct the $65 million Filmmaker’s Village, which includes a 397-bed student residence hall, a food hall and recreational facilities.

The project is slated for completion in 2014.

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