Standard & Poor's Ratings Services said it lowered its long-term rating to BB-minus from BB-plus on the Public Finance Authority, Wis.' series 2012 bonds issued for Roseman University, located in Henderson, Nev., and South Jordan, Utah.
The outlook is stable.
"The downgrade reflects the expected significant upcoming debt issuance of approximately $63.8 million in the next few months, $37 million of which is new money bonds to finance Roseman's expansion into a college of medicine," said Standard & Poor's credit analyst Luke Gildner. "We believe the amount of debt and the aggressive growth strategy into a new line of business will increase the university's already high debt burden and risk profile, while the increase in operating expenses associated with the expansion could compress margins in the near term."
The rating also reflects the university's current narrow programmatic focus and the general market trends of declining demand for pharmacy schools, extremely weak financial resource metrics, and institutional risk-taking strategy. Supporting the rating is a history of strong enrollment and net tuition revenue growth.
