Moody's Investors Service said it has downgraded Morehouse College, Ga.'s rating to A3 from A2 on the Series 2007 bonds issued through the Development Authority of Fulton County.

The downgrade of the college's rating to A3 with a negative outlook reflects continued pressure on enrollment and trend of declining net tuition revenue, declining financial resources and liquidity, weak cash flow, and a transitional management team.

The A3 rating is based on Morehouse College's established market niche, ability to generate favorable gift revenue, and an adequate balance sheet cushion to debt and operations.

Offsetting factors include a highly competitive student market coupled with low net tuition per student, thin unrestricted liquidity, and weak debt service coverage.

The negative outlook is driven by year-over-year enrollment declines, declining financial resources and liquidity, weakening cash flow, and a transitional senior management team.

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