info

Yes No
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
Enter the above code here:
Can't read?
Try a new set
Send Cancel
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
OK
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
OK
Rating Action:

Moody's downgrades Haverford College, PA to Aa3 and Aa3/VMIG 1; outlook stable

Global Credit Research - 20 Aug 2013

$123M rated debt affected

New York, August 20, 2013 -- Moody's has downgraded the ratings on Haverford College's long-term bonds to Aa3 from Aa2 and lowered the ratings on short-term debt to Aa3/VMIG 1 from Aa2/VMIG 1. All of the bonds were issued by the Delaware County Authority. The outlook is stable. The downgrade is driven by a slow recovery in the college's endowment following significant investment losses in FY 2009 and weakened operating performance. The stable outlook anticipates growth in expendable financial resources resulting from favorable investment returns estimated at 14.1% as of June 30, 2013, expectation of increased gift flow, and reduced reliance on endowment draws to support operations.

SUMMARY RATING RATIONALE

Haverford College's Aa3 rating reflects a prominent market position with strong student demand, proven fundraising ability, healthy monthly liquidity to support operations and daily liquidity, which, together with a back-up bank facility, adequately covers demand debt. Offsetting these factors are weak endowment recovery and thin expendable financial resources relative to Aa-rated peers, stagnant net tuition revenue, thinning operating margins, and a needs blind student aid policy requiring greater reliance on endowment spending. The stable outlook reflects expectations for increased gift revenue to strengthen the endowment and provide greater support for operations as well as management of expense growth and the absence of large scale debt or capital plans in the near term.

The Aa3/VMIG 1 on the college's 2008 variable rate demand bonds is based, in large part, on the sufficiency of assets available on a same-day basis when combined with a committed back-up bank facility with TD Bank, NA (Aa3/P-1 stable). The college also has an adequate amount of available funds with weekly liquidity which could be shifted to investments with same-day liquidity should the bank facility not be renewed upon expiration or terminated prior to the expiration date.

CHALLENGES

* The college has been unable to recoup investment losses and rebuild its endowment relative to similarly sized Aa-rated private colleges after facing an outsized 35% loss in FY 2009 and weaker returns in subsequent years relative to peers. The portfolio has been further diminished by higher than average draws on the endowment to provide financial aid and to support operations. Despite having lower financial resources than peers, expendable financial resources provide adequate coverage of debt and operations at 2.04 times and 2.88 times, respectively for an Aa3 credit.

* Operating performance has narrowed to a 13.3% operating cash flow margin in FY 2012 compared to a healthier 20.5% cash flow margin in FY 2010 with expectations of muted performance in FY 2013. Average debt service coverage of 2.76 times is weaker than the 3.40 times FY 2012 median for Moody's Aa-rated small colleges.

* Net tuition revenue has remained relatively stagnate over the past five years due to high and increasing discount rates (39.8% in FY 2012) in part due to the college's need-blind financial aid strategy. Net tuition revenue, the college's largest revenue source, was unable to offset declines in endowment draws, further stressing operating performance.

*Haverford relies on a back-up bank facility to provide adequate liquidity for $29.7 million of variable rate demand bonds. Assets of the college available on a daily basis total only $19 million and TD Bank, NA provides $30 million of additional liquidity.

STRENGTHS

* Haverford maintains its superior market position as a highly selective liberal arts college located in an affluent suburb west of Philadelphia with improving selectivity and stable enrollment. In fall 2012, the freshmen selectivity rate was 22.9% and the matriculation rate was 38.9%.

* Monthly liquidity, at 722 monthly days cash on hand as of FYE 2012, exceeds the FY 2012 median for small Aa-rated private colleges of 501 days providing very strong support for operations. The college could continue to operate for almost two years if revenue were to fall to zero and expenses were to continue unabated.

* The board and alumni have a proven history of strong support for gift campaigns. The college is in the silent phase of a campaign focused on building the endowment to support scholarships. Gifts per student averaged $14,493 in FY 2012, well above Moody's 2012 Aa median for small colleges of $12,308.

* The college has no major debt-funded capital improvement plans in the short- to mid-term, which should enable the college to grow the endowment with anticipated increases in gift revenue and retained earnings.

Outlook

The stable outlook reflects Moody's expectation for increases in gift revenue to rebuild endowment value. An increased endowment will enable the college to provide greater revenue support for operations and offset stagnate tuition revenue and increased expenses.

WHAT COULD CHANGE THE RATING UP

An upgrade is not likely in the near-term given the downgrade. A positive outlook could result from endowment growth that exceeds similarly rated peers over a multi-year time horizon, as well as improved operating performance that reduces reliance on endowment revenue.

WHAT COULD CHANGE THE RATING DOWN

The rating could be lowered if there were a continued material decline in balance sheet strength versus peers, continued weakness in operating performance that requires larger endowment draws, or a weakened market position reflected in significantly weaker student demand.

The principal methodology used in the long term rating was U.S. Not-for-Profit Private and Public Higher Education published in August 2011. An addtional methodology used in the short term rating was Rating Methodology for Municipal Bonds and Commercial Paper Supported by a Borrower's Self-Liquidity published in January 2012. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Heidi Wilde
Analyst
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Edith F Behr
VP - Senior Credit Officer
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's downgrades Haverford College, PA to Aa3 and Aa3/VMIG 1; outlook stable
No Related Data.

 

© 2015 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 ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY’S (“MOODY’S PUBLICATIONS”) MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S 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. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S 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. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S 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 AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS FOR RETAIL INVESTORS TO CONSIDER MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS IN MAKING ANY 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.


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 the Moody’s 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 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(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 SUCH RATING OR 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 rating, agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS 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.”


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 clients. It would be dangerous for “retail clients” to make any investment decision based on MOODY’S credit rating. If in doubt you should contact your financial or other professional adviser.


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 rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.

 

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

 
© 2015 Moody's Investors Service, Inc., Moody’s Analytics, Inc. and/or their affiliates and licensors. All rights reserved.
Regional Sites: