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The pandemic will likely stall some higher education capital projects, Fitch Ratings states in a new report. Revenue stress, budget shortfalls and enrollment declines brought on by COVID-19 may lead to a decline in the number of projects.
In the medium term, the ratings agency expects the number of projects to increase.
“Colleges and universities will need to expand housing and either upgrade or repurpose existing assets and a project finance structure may give the college some flexibility in planning and financing these projects,” Stacey Mawson, director at Fitch Ratings, said in a press release.
The report outlines what sets of criteria Fitch will use to rate the projects.
“Determining which criteria will anchor the analysis depends on debt structure, repayment, affiliation with the institution, and exposure to completion and cost risk,” the report states. “While anchoring its analysis on one criteria, Fitch will look to the other criteria to inform its assessment of the key rating drivers in a higher education setting.”
Projects may be evaluated using Fitch’s infrastructure, higher education or affordable housing criteria.
