Moody's Investors Service said it has downgraded Emporia State University, Kan., to A2 from A1.
The rating action affects $13 million of Series 2010J bonds issued through the Kansas Development Finance Authority (KDFA).The rating is under review for downgrade.
The downgrade to A2 from A1 reflects deepening operating deficits resulting in insufficient cash flow to cover annual debt service and the rapid erosion of unrestricted liquidity. The rating also incorporates the university's vulnerability to state budgetary challenges given ESU's relatively high dependence on state appropriations for operations.
The A2 rating reflects the university's low balance sheet and operating leverage and solid oversight and coordination from the Kansas Board of Regents and Kansas Development Finance Authority.
