Fitch Ratings downgraded Chicago-based Roosevelt University last week and assigned a negative outlook as the school struggles with enrollment challenges.

Fitch lowered the rating to BBB from BBB-plus. The action impacts $226 million of debt issued through the Illinois Finance Authority. The university significantly increased its debt load to finance construction of new downtown building that houses an academic center and additional student housing.

"The downgrade to BBB reflects revised projections for the university's ongoing financial performance" which "fail to provide a material offset for the university's highly leveraged position," Fitch wrote.

The negative outlook is due to enrollment struggles and further softening could undermine the financial results required to uphold the current rating, Fitch said. Analysts praised the school's management team and its efforts to strengthen demand along with adequate balance sheet resources.

The school, founded in 1945, also operates a suburban campus and has an enrollment of 4,760. Moody's Investors Service late in 2012 lowered Roosevelt one notch to Baa3. The university has seen four years of declining enrollment forcing it to offer more financial aid which has limited tuition growth and strained operations and debt service coverage.

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