New Mexico State University, based in Las Cruces, N.M., expects to increase debt by about $10 million in the next 18 months.

DALLAS - New Mexico State University's enrollment has fallen for the fourth year in a row, prompting Standard & Poor's to lower the rating on about $136 million of outstanding debt to AA-minus from the previous AA.

The downgrade comes after S&P placed a negative outlook on the debt in 2014 and a Moody's Investors Service downgrade the same year to Aa3, the equivalent of S&P's new rating.

"The downgrade reflects our view of the continued decline in the university's enrollment through fall 2014, and operating deficits on an adjusted basis through fiscal 2014," said Standard & Poor's credit analyst Charlene Butterfield. "Management has implemented strategies to increase enrollment and while first-time freshmen increased for the first time since fall 2010, preliminary indicators suggest total enrollment will be lower for the fourth year in a row in fall 2015."

Full-time-equivalent enrollment of 21,611 in fall 2013 represented a 3% drop from fall 2012. Applications continued to decline in fall 2013 by nearly another 10%, according to S&P.

"The stable outlook reflects our expectation that incoming freshmen classes will continue to increase from fall 2015 levels, leading to stabilized overall enrollment over time," according to the latest report. "We also expect financial resource ratios to remain at or near current levels during the next one to two years, and that they will offset anticipated full-accrual operating deficits in the next two fiscal years."

New Mexico State expects to increase its debt load by about $10 million over the next 18 months, according to analysts.

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