Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Rating Update:

MOODY'S DOWNGRADES AGNES SCOTT COLLEGE'S (GA) RATING TO A2 FROM A1; OUTLOOK IS STABLE

23 Nov 2010

TOTAL RATED DEBT OUTSTANDING IS $73.3 MILLION

Georgia Private Colleges & Universities Auth.
Higher Education
GA

Opinion

NEW YORK, Nov 23, 2010 -- Moody's Investors Service has downgraded Agnes Scott College's ("Agnes Scott" or the "College") rating to A2 from A1 on the Series 1999 and 2004 A & B Bonds issued through the Georgia Private Colleges and Universities Authority (please refer to the RATED DEBT section). The downgrade reflects stagnant financial resource growth coupled with a high debt burden, prolonged operating deficits, and a challenged student market position evidenced by low and declining net tuition per student, high discount rate, and deteriorating enrollment demand metrics. The rating outlook is stable at the lower rating level.

RATING RATIONALE: The A2 rating with a stable outlook reflects the College's large financial resource base, a key factor underpinning the rating and offsetting challenges of a small enrollment base, a highly competitive and challenged student market position, and consistently imbalanced operating performance and weak cash flow, as calculated by Moody's.

LEGAL SECURITY: The Series 2004 A and B bonds are unsecured general obligations of the College. For the Series 1999 bonds, the College has pledged all of its Certain Unrestricted Revenues (tuition and fees, unrestricted contributions, auxiliary enterprises and other revenues of the unrestricted net asset class under Generally Accepted Accounting Principles). Moody's notes that the College amended the security feature to include temporarily restricted net assets due to the reclassification of net assets under UPMIFA, which Georgia adopted for FY 2009. The Series 2009 bonds, which are not rated by Moody's and were issued to partially refund the Series 1999 bonds, are subordinate to the Series 1999 bonds. There is no debt service reserve fund securing the Series 1999 and 2004 bonds.

INTEREST RATE DERIVATIVES AND DEBT STRUCTURE: The College has $11.6 million of Series 2004B variable rate demand bonds outstanding, supported by a letter of credit from Wells Fargo Bank (rated Aa2/P-1) expiring on October 1, 2011. The Reimbursement Agreement contains various events of default, which if breached, could result in acceleration of the bonds and immediate repayment required by Agnes Scott. The Agreement also contains a financial covenant requiring the College to have a ratio of its unrestricted and unencumbered investments and cash to its current and long-term debt (including capital leases) of not less than 1.50 times at the end of each fiscal year based on audited financial statements. As of June 30, 2010, the College was in compliance with the financial covenant with coverage of 2.96 times. Moody's notes that the College has Agnes Scott does not have any interest rate derivatives outstanding.

CHALLENGES

*Prolonged operating deficits, with a calculated margin of -15.2%, by Moody's calculation, for FY 2008-2010. The College budgets for breakeven performance. However, the consistent deficits calculated by Moody's reflects an endowment spend rate of 6% annually compared to Moody's standard 5% endowment spend rate and only partially budgeting for depreciation. Agnes Scott is building reserves into its budget for depreciation, and its enrollment coupled with expense reductions led to a less severe annual operating deficit of -8.6% in FY 2010. Over the next five to ten years the College plans to gradually reduce its endowment spend; however it is expected to remain slightly above the 5% industry standard spend rate.

*A very small enrollment base of approximately 900 FTE students, which Moody's believes makes the College's financial position more vulnerable to fluctuations in enrollment. Agnes Scott, a small liberal arts college for women in Decatur, Georgia, a suburb of Atlanta, primarily serves students at the undergraduate level. As a women's college, Agnes Scott has a relatively narrow market niche and has experienced pressure on its total enrollment reflected in its low matriculation and retention rates. Further, the College substantially discounts its tuition to respond to a highly competitive student market position, which was 60.1% in FY 2010 and has led to a low net tuition per student of $11,552 in FY 2009 dramatically lower than Moody's median of $21,291 for small A-rated private colleges and universities.

*Decline in financial resources since FY 2007, with expendable financial resources of $173.7 million in FY 2010 compared to $276.9 million in FY 2007. Further expendable financial resources have not grown back to FY 1999- FY 2001 levels of over $300 million. We would expect the College's financial resource growth to remain stagnant going forward given the continued endowment draws of over 5%.

*Modest gift revenue relative to its A-rated peers. The College averaged over three-years a gift revenue of $7.3 million in FY 2010. Agnes Scott currently is in the quiet phase of a comprehensive campaign to raise funds for scholarships, endowment, and capital projects. The goal of the campaign is $125 million, which is significantly greater than the $60 million goal for the College's last fundraising campaign that ended in 2004 with approximately $70 million raised.

*Modest revenue diversity and relatively high dependence on investment income for operations, with investment income representing 36.3% of Moody's adjusted operating revenues. Other revenue sources include tuition and auxiliaries at 46.1%, gifts at 13.4%, and other sources at 4.2%.

STRENGTHS

*Solid balance sheet and liquidity profile despite a 31.3% decline in expendable financial resources from FY 2008. In FY 2010, expendable financial resources of $173.7 million cushion debt and operations 2.4 times and 3.8 times, respectively. The College also has robust monthly liquidity of $41.2 million which translates into 380 monthly days cash on hand. Additionally, the College's monthly liquidity provides a healthy 3.65 times coverage of demand debt, which represents $11.6 million of total debt outstanding.

*Two consecutive years of enrollment growth after several years of enrollment declines. In fall 2010 the College enrolled 909 full-time equivalent (FTE) students, a 6.8% increase from FY 2009 and the largest total enrollment at the College in five years. Over eight years, the College's FTE enrollment has averaged approximately 893 students. Agnes Scott's ten year plan is to increase total enrollment FTEs to 1,100 by FY 2020 and over the past two fiscal years management has engaged an enrollment consultant, as well as has focused on retention to improve and grow its total enrollment. Moody's notes that the College is conducting a search for a new Vice President of Enrollment. Management does not expect the open position, currently filled with an interim vice president, or transition to negatively impact enrollment.

*Improved Board oversight of budgeting process, with the College now using a multi-year budgeting process and produces multiple budget scenarios for the Board's review.

RECENT DEVELOPMENTS

Effective in FY 2009, the state of Georgia adopted the Uniform Prudent Management of Institutional Funds Act (UPMIFA), which resulted in a reclassification of $176.8 million of the College's unrestricted financial resources to temporarily restricted resources during FY 2009. This reclassification, with investment losses incurred in the year, resulted in a dramatic decline in unrestricted financial resources. However, the reclassification had no impact on expendable resources, with the lower expendable financial resources due to investment losses and endowment draw.

Outlook

The stable outlook at the lower rating reflects the College's large financial resource base providing strong coverage for both debt and operations, and recent enrollment growth.

What Could Change the Rating - UP

Enrollment and net tuition revenue growth, improved operating performance, total revenue growth, and balance sheet improvement

What Could Change the Rating - DOWN

Further deterioration in the balance sheet profile; continued stress on student market reflected in enrollment or net tuition revenue declines; failure to meet fundraising goals or pressure on the fundraising campaign

KEY INDICATORS (FY 2010 financial data and fall 2010 enrollment data)

Total Full-Time Equivalent (FTE) Enrollment: 909 students

Freshmen Applicant Acceptance Rate: 50.4%

Freshmen Matriculation Rate (accepted students enrolled): 24.8%

Net Tuition per Student: $11,509

Total Direct Debt: $73.3 million

Expendable Financial Resources: $173.7 million

Total Financial Resources: $239.4 million

Expendable Resources to Direct Debt: 2.37 times

Expendable Resources to Operations: 3.82 times

Monthly Liquidity: $41.2 million

Monthly Days Cash on Hand (unrestricted funds available within 1 month divided by operating expenses excluding depreciation, divided by 365 days): 380.1 days

Three-year Average Operating Margin: -15.2%

Total Operating Revenue: $41.8 million

Operating Cash Flow Margin: 12.2%

Three-Year Average Debt Service Coverage: 0.52 times

Reliance on Student Charges (% of Operating Revenues): 46.1 times

Reliance on Investment Income (% of Operating Revenues): 36.3 times

RATED DEBT

Series 1999: A2; insured by MBIA Insurance Corporation

Series 2004A and 2004B: A2

CONTACTS

College: John Hegman, Vice President Business and Finance, (404) 471-6278

METHODOLOGY

The principal methodology used in this rating was Moody's Rating Approach for Private Colleges and Universities published in September 2002.

The last rating action with respect to Agnes Scott College was on June 23, 2009 when the A1 rating was affirmed and the outlook was revised to negative from stable. That rating was subsequently recalibrated to A1 with a negative outlook on May 7, 2010.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service information.

Moody's Investors Service considers the quality of information available on the credit satisfactory for the purposes of assigning a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Erin V. Ortiz
Analyst
Public Finance Group
Moody's Investors Service

Diane F. Viacava
Backup Analyst
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

MOODY'S DOWNGRADES AGNES SCOTT COLLEGE'S (GA) RATING TO A2 FROM A1; OUTLOOK IS STABLE
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH  CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND  OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES  ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR  PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​​​
Moodys.com