Fresno Pacific University on Watch

Moody's Investors Service placed Fresno Pacific University's Ba2 rating on a watchlist for a possible downgrade.

The rating agency said Wednesday's action affects $6 million of outstanding debt issued through the California Education Facilities Authority.

Moody's said it has concerns about the university's level of liquidity, available financial resources, and its challenging debt structure.

FPU continues to struggle with limited unrestricted resources, with much of the institution's expendable resources representing less liquid collections of art, according to Moody's analysts.

The agency said Fresno Pacific's debt structure, in tandem with thin liquidity, is worrisome because it holds a $7.9 million three-year loan with a foundation through the Mennonite church and an additional $6.3 million of bank debt and loans to individuals.

Moody's downgraded the debt to speculative-grade Ba2 in January 2009.

Gross revenues and a mortgage on certain school property secure the university's rated 2000 bonds. The bonds are further backed by an irrevocable guarantee by the Fresno Pacific University Foundation.

Moody's said it expects to conclude its watchlist period within the next 90 days.

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