CHICAGO – Standard & Poor's removed from CreditWatch a Detroit charter school operator after receiving sufficient financial information.
The agency had placed Detroit Community Schools on watch with negative implications Sept 10.
After getting updated financials, it removed DCS from watch Nov. 16, affirmed its speculative grade B-minus rating, and assigned a stable outlook.
The grade K-12 charter school serves just under 800 students.
"The stable outlook reflects our view of DCS' stabilizing enrollment and improved operating performance in fiscal 2015," said Standard & Poor's analyst Avani Parikh, "with maximum annual debt service coverage right at 1 time and a weak, but steady liquidity position."
The school system remains in violation of its fund balance covenant, but is retaining the necessary funds toward meeting requirements, and the violation is not considered an event of default nor have bondholders taken any action at this time, the rating agency added.
DCS' financial metrics remain slim and the system must demonstrate a sustained trend of headcount and operational stability, with continued progress toward resolving the covenant violation in order to keep its current rating. A downgrade could occur if bondholders take any action.
"The B-minus rating further reflects our view of the school's significant enrollment decline since fall 2010 due to managerial instability and an economically challenged service area," Parikh added. In one plus, headcount for fall 2015 is up 1.6%.
