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December 11, 2020

UNH bond rating lowered amid pandemic impact

PHOTO | File image
By Natalie Missakian

Budgetary fallout from the COVID-19 pandemic has led S&P Global Ratings to lower its bond rating for the University of New Haven, but the agency upgraded the university’s outlook from negative to stable.

The agency gave a BBB- rating for Connecticut Health & Educational Facilities Authority’s (CHEFA) series K-1 and k-3 revenue bonds issued for the university, down one notch from its previous rating of BBB.

S&P credit analyst Kevin Barry said the rating “reflects our opinion of the university’s trend of smaller positive operating margins and weakened available resources, which are no longer commensurate with those of ‘BBB’ rated peers.”

“While we recognize recent downdraws were primarily strategic and planned related to capital needs and facility enhancements, we believe current levels of available resources could limit financial flexibility as UNH has experienced declines in cash and investments,” Barry said in his report.

George Synodi, UNH vice president for finance and administration, said in a phone interview that the lower rating would have no impact on existing outstanding bonds. 

While it could raise the cost of new borrowing, the university has no plans to take on new debt, he said. 

“We expect over time we’ll move back to BBB as we move forward and move beyond the pandemic,” he said. 

UNH was among dozens of colleges and universities that S&P  downgraded from “stable” to “negative” last April due to the unknown financial impact of the pandemic. 

Barry said the decision to upgrade UNH’s outlook to stable reflects analysts’ opinion that the university “will likely maintain positive operations on a full-accrual basis, maintain current enrollment levels in new programming, and sustain available resources relative to the ratings agency.”

“We’re pleased that they [now] see our outlook as stable. We do as well,” said Synodi.

He said the university’s enrollment last fall exceeded the budget target “and we’re cautiously optimistic for the spring.”  

Contact Natalie Missakian at news@newhavenbiz.com

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