FRC retains long-term rating status
Feather River College announced that S&P Global Ratings affirmed its ‘BBB’ long-term rating for the Feather River College Foundation (FRCF) on the California Community College Financing Authority’s series 2003A student housing revenue bonds. This is the same rating earned last fiscal year.
While the outlook is negative for all nationwide college housing projects due to COVID pandemic, the ‘BBB’ rating affirmation is based on Feather River College’s history and support of debt at its covenanted levels. The project is likely to meet its debt service covenant in fiscal 2020. The student housing negative outlook nationally reflects S&P’s view of the occupancy and financial risk that housing projects face as a result of the COVID-19 pandemic, which could pressure ratings.
The bond rating was based in part upon S&P’s belief that given the strength of the college’s balance sheet, FRC did not qualify for a TRANs (tax revenue anticipation notes) relief program offered by the state. S&P further expects state funding for the fiscal 2020 and fiscal 2021 years to be affected by payment deferrals. Even with these challenges, the rating agency believes that Feather River College and the Foundation will be able to maintain its debt obligation from its operating fund and large reserve levels, as it has done since issuance in 2003.
The Feather River College Foundation has about $1.2 million in debt outstanding as of June 2020, which primarily includes the series 2003A bonds ($815,000). The series 2003A student housing revenue bond matures in July 2022. Superintendent/President Dr. Kevin Trutna added, “The partnership between FRC and the Foundation provides dormitory housing opportunities and we feel that the Foundation is exemplary in helping FRC students through their community-supported activities.”