The Philadelphia Authority for Industrial Development sold $43.6 million in bonds on behalf of La Salle University to fund campus improvements and refund previously issued securities.
The bonds mature between 2030 and 2042, yielding between 6% and 6.75%. They received a rating of BB- from S&P Global Ratings and BB from Fitch Ratings, which assigned a negative outlook. The rating also marked a downgrade from Fitch.
The rating reflects the “university’s financial asset base relative to its significant debt that, while still adequate, has declined notably in recent years,” Fitch analysts wrote.
La Salle University is a private, Catholic university in Philadelphia. The issuance comes amid declining enrollment at the school, decreasing the tuition dollars that form the bulk of university revenue.
La Salle is yet to recover from a COVID-19 pandemic-related hit. It enrolled 3,556 students in the fall of 2023, down 25% from fall 2019, according to the official statement accompanying the sale of the bonds. The university recorded $92.1 million in operating revenue in 2022-23, compared to $109.2 million in 2019-20, according to the bond documents.
La Salle will spend the bond proceeds on renovations to its athletic facilities, new roofs for campus buildings, technology upgrades, and new classroom furnishings. The university will also use the issuance proceeds to refund bonds that it sold in 2012 and 2017 to achieve debt service savings.
The bonds are limited obligations of the authority, secured by La Salle revenue and campus properties.
RBC Capital Markets, LLC served as underwriter on the issuance, purchasing the bonds for $41.4 million. The price reflected a discount of $2.2 million.