Standard & Poor’s has raised the outlook on the debt issued on behalf of two universities in New Orleans as their enrollment continues to improve following the hurricanes of 2005.
The outlook was revised to stable from negative for $56.2 million of A-plus rated debt issued by the Louisiana Public Facilities Authority for Loyola University. Standard & Poor’s also raised the outlook to stable from negative on LPFA debt issued on behalf of Tulane University, which also has an underlying rating of A-plus.
Lori Torrey, a credit analyst with the rating agency, said Loyola’s improved outlook is the result of its successful implementation of recovery and financial plans that have it back to essentially break-even operating performance while increasing unrestricted net assets.
“The stable outlook also reflects our expectations that Loyola University’s demand trends and enrollment levels will improve over the next two years or that operating performance could soften,” Torrey said.
A 2007 freshman class at Tulane that is 50% larger than the incoming class of 2006 and a growing endowment were cited as the reasons for its improved outlook.
Tulane, located in the uptown district of New Orleans, suffered less damage than other parts of the city. Two-thirds of the campus flooded when Hurricane Katrina hit the city in late August 2005, but nearly all the buildings were open by the time students began returning to campus in January 2006 for the spring semester.
Tulane suffered some $380 million in hurricane-related damage. It has received $250 million from several insurance policies, and is in negotiations for further recoveries.
Enrollment at Loyola has dropped from 5,532 in spring 2005 to the current 4,585. School trustees unanimously approved a restructuring plan in May 2006 that realigned five colleges, dropped several degree programs, and eliminated 17 faculty positions.
All of the university’s debt will mature in 2016. Loyola currently has no additional debt plans.
