Milwaukee Academy of Science 2013 Bond Outlook Revised To Positive On Improved Finances

Stocks and Financial Services Press Releases Friday March 17, 2017 08:59
CHICAGO--17 Mar--S&P Global Ratings

CHICAGO(S&P Global Ratings) March 17, 2017--S&P Global Ratings revised its outlook to positive from stable on the Milwaukee Redevelopment Authority, Wis.' $12 million series 2013 redevelopment education refunding revenue bonds issued on behalf of the Milwaukee Science Education Corp. Inc. (d/b/a Milwaukee Academy of Science [MAS]). At the same time, we affirmed our long-term rating of 'BB+' on MAS' series 2013 revenue bonds.

"The positive outlook reflects our view of the academy's continuous improvement in operations with fiscal 2016 ending in a full-accrual surplus, leading to increased days' cash on hand and maximum annual debt service (MADS) coverage, as well as a below-average debt burden when compared to medians and peers," said S&P Global Ratings credit analyst Gauri Gupta.

"We assessed MAS's enterprise profile as adequate, characterized by stable enrollment and satisfactory academic performance with MAS having a specialized curriculum in STEM, as well as a long history of operations," she added. Despite these strengths, we recognize that the academy is close to facility capacity and does not have a history of maintaining a waitlist, which adds an element of risk.

We assessed MAS' financial profile as adequate, characterized by improving operations with a full-accrual surplus in fiscal 2016, strengthening liquidity position and MADS coverage, and a below-average debt burden.

Combined, we believe these credit factors lead to an indicative stand-alone credit profile of 'bbb-'. As our criteria indicate, the final rating can be adjusted below the indicative credit level due to a variety of overriding factors.

The 'BB+' rating on the academy's bonds better reflects our view of MAS' financial performance that is more in line with the current rating medians and peers. The academy is a public grade K-12 charter school in downtown Milwaukee with 1,056 enrolled students for fall 2016, compared to 1,046 in fall 2015. The $12 million series 2013 fixed-rate bonds are the school's only debt. School revenue and a mortgage on the school's facilities secure the bonds.

Among the facilities excluded from the mortgage are the unoccupied topmost seven floors of a tower that the school is exploring divesting.

"The positive outlook reflects our belief that within the one-year outlook period, the academy will maintain its demand profile and enrollment, liquidity will continue to improve or remain at current levels, and operating performance will remain positive on a full-accrual basis such that MADS coverage will improve," added Ms. Gupta.

We also do not expect the academy to issue additional debt. Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information.

Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com and atwww.spcapitaliq.com.
All ratings affected by this rating action can be found on the S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.

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