Standard & Poor's Rating Services said it lowered by three notches, to B from BB its rating on New Hampshire Health & Educational Facilities Authority's debt, issued for Franklin Pierce University.

The outlook is stable.

"The multinotch downgrade reflects the university's poor financials, weakened enrollment profile, increased discounting, and very small endowment, which have placed a significant amount of stress on the university over the past few years leaving limited flexibility to withstand any adverse changes," said Standard & Poor's credit analyst Margaret McNamara.

The rating action also reflects the university's heavy reliance on a line of credit for cash flow which is on a six-month renewal cycle, a one-time 32% draw on the endowment to fund capital needs in fiscal 2012, which stresses the university's already-slim liquidity, and management's indication that it may violate the net assets-to-debt ratio in fiscal 2013.

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