S&P: Seton Hall University, NJ Bond Ratings Lowered To 'A-' On Weak Selectivity And Matriculation; Outlook Stable
At the same time, we lowered our rating on the authority's series 2008D variable-rate demand bonds issued for Seton Hall to 'AA/A-1+' from 'AA+/A-1+', whereby the long-term component of the rating is based on our 'A-' rating on Seton Hall and our rating on the letter of credit (LOC) provider, TD Bank N. A. and the short-term rating is based solely on the short-term rating on the LOC provider.
"The downgrades reflect Seton Hall's weak selectivity and matriculation rates for the rating category and negative net tuition revenue growth in fiscal 2015 and expected growth in the tuition discount rate," said S&P Global Ratings analyst Charlene Butterfield.
Seton Hall's bonds are secured by the university's general obligation. Management will use series 2016C bonds to fund the construction of a welcome center on the main campus, as well as renovations to its University Center, and pay costs of issuance.
The stable outlook reflects our expectation that, over the two-year outlook period, Seton Hall will continue to generate solid surpluses, maintain overall stable enrollment while improving current demand trends, and maintain available resources at current levels or better.
We could consider a lower rating during the next one to two years if Seton Hall's operating performance decreases to deficit levels, or if available resources decrease from current pro forma levels.
Given the upcoming additional debt and risk associated with starting up the medical school, and the light pro forma available resources compared with debt and expenses, we do not expect to raise the rating during the next two years. Seton Hall is about 14 miles from New York city in suburban South Orange. The university is a private, Catholic, four-year institution founded in 1856. Seton Hall offers a mix of undergraduate and graduate programs including a law school in Newark. Among the university's graduate degrees are nursing, business, theology, and diplomacy.
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