The California Educational Facilities Authority issued $110 million in bonds on behalf of St. Mary’s College of California (SMC) to refund a previous issuance and finance the college’s strategic plan.
The bonds mature between 2030 and 2053, yielding between 4.61% and 5.68%. They received a rating of BBB- from S&P Global Ratings.
The authority is loaning the bond proceeds to the college.
“We assessed SMC’s enterprise risk profile as adequate, reflecting falling enrollment during the past few years and weak selectivity for the rating category, partially offset by a strong retention rate and an enrollment increase in fall 2023 with expectations that this trend will continue,” S&P analyst Mary Ellen Wriedt said in a press release.
Falling post-pandemic enrollment, as well as a decline in inflation-adjusted tuition revenues, have dimmed the economic outlook of many U.S. universities.
At SMC, the effects of falling enrollment have been particularly acute. The college enrolled 25% fewer students in Fall 2023 compared to Fall 2019, though it does not project enrollment to decrease this year for the first time since before the COVID-19 pandemic.
Less students have weighed on SMC’s finances. That enrollment translated to just $60 million in tuition revenue in 2023, compared to $90 million in 2019. Total operating revenue fell from $134 million to $115 million over the same period.
The issuance follows a rating downgrade by Fitch earlier this year, which brought the college just one notch above junk territory.
SMC is a private catholic college near Oakland with 2,475 enrolled students. The bonds are limited obligations of the authority, payable by loan repayments by the college, which are financed by its revenue.
Wells Fargo Bank, NA, served as lead underwriter on the issuance, purchasing the bonds for $108 million. The price reflected a discount of $2 million.