The Rhode Island Health and Educational Building Corporation issued $132.8 million in bonds to finance capital improvements at Bryant University and refund previously issued securities.
The bonds mature between 2025 and 2048, yielding between 2.99% and 4.28%. They pay interest at 5%. Thes securities received a rating of A3 from Moody’s Investors Service and A- from S&P Global Ratings. The rating marked a downgrade from Moody’s.
The corporation will loan the bond proceeds to Bryant.
“The downgrade to A3 was largely driven by Moody’s expectations that highly competitive student market conditions will continue to pressure demand and constrain pricing power, which, when coupled with the absorption of costs related to the implementation of new strategic initiatives, will provide for marginally thinner operating margins and debt service coverage over the next several years,” Moody’s analysts wrote.
The issuance comes amid falling enrollment at Bryant. That has put pressure on its revenue, which is driven by tuition. Enrollment has fallen 5% since 2019, according to the official statement accompanying the sale of the bonds. Tuition and related fees provide 80.8% of Bryant’s operating revenue, according to the bond documents.
Bryant approved a three-year $140 million capital plan last October. The plan calls for new residence halls and expanded athletic facilities, among other improvements.
The bonds are special obligations of the corporation, payable by Bryant revenue.
Barclays Capital Inc served as lead underwriter on the issuance, purchasing the bonds for $144.7 million. The price reflected a premium of $12 million. PFM Financial Advisors LLC and The Yuba Group LLC acted as municipal advisors.