Standard & Poor's Ratings Services said it lowered its rating on Maine Health & Higher Educational Facilities Authority's revenue debt, issued for Colby College, one notch to AA from AA-plus.
The outlook is stable.
The downgrade reflects Standard & Poor's opinion of the college's significant increase in borrowing with the $100 million series 2015 bonds; this brings financial resource ratios in-line with its peers in the middle of the rating category and elevates its debt burden. Standard & Poor's believes the college can absorb the debt at the AA rating.
At the same time, the rating service assigned its AA rating and stable outlook to Colby College President & Trustees' $100 million series 2015 unsecured taxable general obligation (GO) bonds. The bonds are an unconditional GO of the college.
"We do not believe a rating change is likely during the outlook period, but we could lower the rating if operating performance were to deteriorate significantly or if the college were to issue significant additional debt that dilutes expendable resources significantly below current levels compared with rating category medians," said Standard & Poor's credit analyst Nick Waugh. "We do not expect to raise the rating within the outlook period due to the level of financial resources and pro forma debt."
