Sweet Briar College’s long-term debt rating has moved up a notch, with S&P Global Ratings issuing an upgrade Wednesday because of actions the college’s new leaders have taken to stabilize it.
S&P raised its rating on Sweet Briar debt from B to B-plus. The small private women’s college in rural Virginia has been closely watched since it announced in March 2015 that it would be closing amid financial and enrollment challenges. Alumnae fought the move, winning a deal to keep the college operating under new leadership. Sweet Briar remained open despite nearly shutting down, but enrollment cratered amid the uncertainty, and the college has been relying heavily on donations.
In raising the college’s debt rating, S&P said that the college’s financial operations have been “relatively stable” in recent years and that it has sufficient financial resources available. Expendable resources in the 2016 fiscal year were recorded at about $37.4 million, the equivalent of about 108 percent of operations and 156 percent of total outstanding debt.
S&P also considered the fact that Sweet Briar has a new management team and new strategic plan. Meredith Woo, a former University of Virginia dean, took over the presidency of the college this year, quickly putting in place plans for a tuition reset and revised curriculum in 2018.
The upgraded B-plus rating is still considered highly speculative. S&P pointed to vulnerabilities in enrollment and demand at the college, as well as high maximum annual debt service equal to 6.2 percent of 2016 operating expenses. It also said operating margins for 2017 will be “somewhat softer than recent levels.”