By Kelly Heyboer | NJ Advance Media for NJ.com
Wall Street is worried about Rider University.
Analysts at Moody’s Investors Service downgraded Rider’s bond rating earlier this week and gave the private, New Jersey university a “negative” outlook. The rating agency cited Rider’s “very weak operating performance,” reliance on a line of credit to cover its expenses, and the financial effects of the pandemic at the 4,600-student school.
The Lawrenceville university’s rating was downgraded from Ba1, or “junk bond” status, to Ba2, an even lower version of junk bond status. “Junk” is a term used for below-investment-grade bonds, meaning Moody’s is telling investors Rider is a risky investment and has a chance of not being able to pay back the money it borrows.
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“While the university has articulated strategies to improve operations, a turnaround, if achievable, will take multiple years,” said the Moody’s report issued Tuesday.
Rider is among many small- and mid-size private universities that were already struggling to stay out of the red before the pandemic wreaked further havoc on their finances. In New Jersey, Centenary University in Hackettstown and Drew University in Madison are among the private colleges that have publicly discussed their ongoing financial problems.
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Many of the smaller private schools are having trouble attracting students when there are less costly public universities nearby with similar programs and amenities.
For Rider, the lower bond rating means it will be more expensive for the university to borrow money for construction or other projects. Ririder University reported approximately $89 million in outstanding debt in 2020, the analysts said. That debt rose to about $110 million with the issuance of new bonds in May.
