Moody's Investors Service downgraded St. Joseph's College, N.Y.'s issuer and Series 2010 bond ratings to Baa3 from Baa1.
The rating action affects $26.5 million of Series 2010 bonds which were issued through the Dormitory Authority of the State of New York. The outlook is negative.
The downgrade reflects the significant deterioration of liquidity within the last two years that is a direct result of continued enrollment declines, stagnant net tuition revenue in a highly competitive and price sensitive student market, and markedly weakened operating performance.
Additionally, the college failed to meet a minimum debt service coverage covenant for its fixed rate bonds.
The Baa3 rating is supported by the college's still mid-sized enrollment base, relatively low leverage, conservative debt structure, and marketable real estate holdings.
The negative outlook incorporates the expectation that the college will be challenged to grow net tuition revenue at or greater than the pace of expenses, thereby limiting its ability to rebuild liquidity.
