Moody’s Investors Service has placed the Ba3 rating on Sacred Heart University’s General Revenue and Refunding Bonds, 2012A on review for downgrade.
The bonds, with $19.5 million outstanding, were issued through the PuertoRico Industrial, Tourist, Educational, Medical and Environmental Pollution Control Facilities Financing Authority.
The review is prompted by uncertainty regarding the impact on enrollment, operations, and liquidity for the university in the aftermath of Hurricane María.
Sacred Heart recently reopened for classes. However, due to a lack of electricity, it is holding day classes only, including on weekends for graduate and evening students. the school has power generators for several campus structures, including its student residences. It has network and internet connectivity and is providing online courses for students unable to reach campus.
Currently, Sacred Heart expects it will complete the fall semester before Christmas and start the spring 2018 semester the third week of January as originally scheduled. It reports the campus suffered no major damage, with essentially all space usable.
“Although Sagrado accomplished a significant feat by resumption of classes, it is uncertain what the hurricane’s ultimate financial impact will be,” said Diane Viacava, lead analyst, higher education, at Moody’s Investors Service Inc.
“Our review will include [Sacred Heart’s] expected fall 2017 enrollment and tuition revenue for the semester, as well as projections for the spring 2018 semester. It will also include the university’s expenditures for recovery, reimbursement from insurance proceeds, and its operating cash forecast. The review will also focus on the university’s longer-term strategies to adjust to the island’s accelerating population declines,” Viacava said.
Meanwhile, Sacred Heart University President Gilberto Marxuach said the university opened its doors to resume the fall semester three weeks after Hurricane María struck on Sept. 20.
“The semester has been saved. This great feat is a testament to our commitment to our students,” he said.
“They will have the responsibility of building a new Puerto Rico. The best thing we could do was to afford them a safe space to retake their lives and rebuild their futures. They have returned with a lot of energy and enthusiasm,” Marxuach said.
“We are grateful that Moody’s has recognized this great effort and afforded us an opportunity to recover and rebuild before the next review,” he concluded.