NEW YORK - Standard & Poor's Ratings Services said it lowered its rating on New Jersey Educational Facilities Authority's outstanding bonds, issued on behalf of William Paterson University (WPU), to A from A+, reflecting increasing leverage, with long-term debt doubling from $66 million in 2001 to $133 pro forma in 2004 (a 102% rise), and additional capital needs; a decline in liquidity, with 2003 unrestricted net assets equal to 16% of operating expenses and 25% of pro forma debt; a relatively high pro forma maximum annual debt service burden of 8.5%; continued weakness and uncertainty in the state funding environment, despite the restoration of originally proposed cuts; and continued lack of capital funding from the state.
Standard & Poor's said it also assigned its A rating to the authority's $30.745 million revenue bonds series 2004A, issued on behalf of WPU, reflecting a history of healthy operating surpluses; strong 28% growth in full-time equivalent (FTE) headcount and, like other New Jersey public institutions, a strong admissions profile; continued success in institutional development and fundraising efforts; and identified revenue sources to support the 2004 bonds.
