Global Concepts Charter School, NY Series 2007 Revenue Bond Rating Raised To #BBB+# On Improved Finances

Stocks and Financial Services Press Releases Tuesday January 30, 2018 09:43
CHICAGO--30 Jan--S&P Global Ratings

CHICAGO (S&P Global Ratings) Jan. 29, 2018--S&P Global Ratings raised its rating on Erie County Industrial Development Agency, N.Y.'s series 2007 civic facility revenue bonds, issued for Global Concepts Charter School (GCCS), one notch to 'BBB+' from 'BBB'. The outlook is stable.

The rating action reflects S&P Global Ratings' view of the school's improved financial profile after the purchase of its previously leased high-school and central-office facilities. The rating service also views the school's low debt, unrestricted reserves that surpass total debt, 288 days' cash on hand, and 5.72x lease-adjusted maximum annual debt service coverage as of fiscal 2017 as factors supporting the rating action. S&P Global Ratings expects the school's operations will likely continue to reflect a healthy financial profile and market position appropriate for the rating level.

"Although unlikely, we could lower the rating or revise the outlook to negative during the two-year outlook period if maximum annual debt service coverage were to decline significantly due to poor expense management, if liquidity were to fall below levels appropriate for the rating category, and if the school were to issue additional debt that materially affects financial profile metrics. We would also view enrollment and demand deterioration due to Erie County's declining school-aged population negatively," said S&P Global Ratings credit analyst Melissa Brown. "We believe a positive rating action is unlikely due to our expectation that the school's enterprise and financial profile metrics will likely remain consistent with peers at the current rating level. Ultimately, we think student enrollment below 1,000 and the school's standalone nature constrain the rating."

The stable outlook reflects S&P Global Ratings' opinion that GCCS' enterprise profile will likely continue to reflect steady demand as the school grows to its facility capacity, as well as high academic performance and solid charter standing. The rating service also expects financial metrics--such as days' cash on hand, total revenue, and debt--will likely remain solid for rating medians.

Revenue of GCCS--defined in governing bond documents as primarily per-pupil funding from the state--secures the bonds. Officials used bond proceeds to purchase the elementary and middle-school buildings. A gross revenue pledge--The school makes principal and interest payments to the trustee under an installment-sale agreement--also secures the bonds. In addition, a mortgage on the school's property secures the bonds. All projects funded by bond proceeds--including classrooms, a new auditorium, and gymnasium--are complete and now in use.

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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