A 140-year-old New York college’s rating is slashed to junk

Bonds

Houghton University, a liberal arts school in Western New York established in 1883, saw its rating downgraded into junk status by S&P Global Ratings.

The rating agency cut the school’s tax-exempt bonds one notch to BB-plus from BBB-minus, citing its track record of deficits plus a large operating shortfall expected in fiscal 2024. 

“We believe the university’s small enrollment base, weak demand profile, and largely restricted financial resources limit flexibility to manage operating challenges,” S&P’s credit analyst Megan Kearns said in a June 14 release.  

A turnaround plan is “already bearing fruit with growing enrollment and a rising endowmant, said Houghton University President Wayne Lewis.

Houghton University

Houghton — which is just under 70 miles from both Rochester and Buffalo — describes itself as a “Christ-centered liberal arts and science university, providing an academically challenging educational experience through an orthodox Christian worldview.”

It joins a string of small liberal arts colleges that are increasingly under financial pressure as enrollments shrink and expenses grow. That’s driven some schools to to shutter or merge with larger institutions. 

Still, the school based in Houghton, New York, has “a good track record of fundraising” which is expected to support its balance sheet, according to S&P. The university’s outlook is stable.

Houghton said it’s acted to shore up its balance sheet. 

“Those actions have included consolidation and refinancing of long-term debt, significant investments in enrollment growth, and the implementation of a new strategic plan,” said Wayne D. Lewis, Jr. the university’s president, in an email. “The strategy is already bearing fruit with growing enrollment and a new all-time high of $80 million for the endowment.”

Houghton has no plans to take on added institutional debt, he added.

As of fall 2023, the school had 775 undergraduate students and 37 graduate students, according to its website.

Articles You May Like

Companies around the world hit by Microsoft outage
Ohio legislature mulls anti-ESG bill
Citadel’s Ken Griffin buys a stegosaurus for $45 million in a record auction sale
How on-time rent payments can help ‘credit invisible’ consumers be seen
Here’s why international buyers are pulling way back from the U.S. housing market