Marywood University, PA Debt Rating Outlook Revised To Stable From Negative On Incremental Operational Improvement

Stocks and Financial Services Press Releases Wednesday November 1, 2017 09:30
CENTENNIAL--1 Nov--S&P Global Ratings

CENTENNIAL (S&P Global Ratings) Oct. 31, 2017--S&P Global Ratings revised the outlook on its 'BB+' rating on Scranton-Lackawanna Health & Welfare Authority, Pa.'s revenue debt, issued for Marywood University, to stable from negative and affirmed the rating.

The outlook revision reflects S&P Global Ratings' opinion of the university's focus on incrementally improving operations to break-even results over the next few fiscal years, coupled with management's expectation of positive operations in fiscal 2017. In addition, university undergraduate enrollment has stabilized over the past two years while graduate enrollment continues to decline.

The institution also experienced a number of senior management changes, including a new president, provost, and vice president of business affairs; the rating service views these changes positively. "We could lower the rating or revise the outlook to negative if Marywood cannot stabilize overall enrollment; if it fails to work toward break-even, full-accrual operations; or if expendable resource ratios were to erode relative to current levels.

We believe additional debt would also likely pressure the rating," said S&P Global Ratings credit analyst Sean Lacey. "While we do not expect to raise the rating during the outlook period, we, however, could do so if expendable resources were to grow to levels we consider more commensurate with the higher rating." S&P Global Ratings assessed Marywood's enterprise profile as strong, characterized by its diverse student mix, decent selectivity and matriculation rates, trend of modestly declining enrollment, and proactive management.

S&P Global Ratings assessed the university's financial profile as vulnerable, characterized by its weak expendable resources and volatile operating performance with prior financial covenant violations in consecutive fiscal years.

The rating service expects positive operations in fiscal 2017, and the university is currently in full compliance with its covenants. Combined, S&P Global Ratings believes these credit factors lead to an indicative stand-alone credit profile of 'bb+' and a long-term rating of 'BB+' Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria.

Please see Ratings Criteria at www.standardandpoors.com for further information.

Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on the S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.


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