00:00Let's take a look at the higher ed sector because Swarthmore College, a small liberal arts school near Philadelphia, just
00:05lost its AAA credit rating.
00:07Joining us now to report on that story is Bloomberg's Amanda Albright.
00:11And Amanda, this is S&P removing its AAA rating from Swarthmore, not anyone else. Am I correct?
00:18That's correct. S&P took Swarthmore down just one level to AA+, so still a very strong credit rating.
00:25Swarthmore is still one of the most prestigious universities in the U.S.
00:29Its acceptance rate is below 8%. But really, the issue that S&P flagged was with rising debt.
00:37And, you know, they made the point that the school is very much still in demand among undergraduate students.
00:42But the issue is really just debt that the college has taken on.
00:45How much debt has it taken on?
00:47So the school has about 500 million of munis outstanding, according to S&P.
00:53And so we saw them sell bonds last year as part of a few campus projects that they're undertaking.
01:00They've really kind of prided themselves on their very beautiful campus.
01:04They've renovated Martin Hall, which is kind of a campus hub.
01:08And they've also sought to become carbon neutral.
01:11So the school says that this is helping just kind of create more longevity with its buildings,
01:18which a lot of schools have, you know, identified as a priority because they want to make sure that when
01:22students visit,
01:23that they're very impressed with the campus facilities and therefore, you know, want to attend.
01:27Right. And want to apply and, of course, keep that admission rate low.
01:31Amanda, when we talk about companies or institutions getting a downgrade,
01:35the risk is that they might see higher borrowing costs as a result.
01:39Is that likely to happen here with Swarthmore?
01:42I don't really see it as a risk with this situation just because the school is so highly rated
01:48and its endowment is approaching $3 billion.
01:51So investors will really look past this downgrade.
01:54A lot of them have their own internal rating systems.
01:56And I think that they're going to see, you know, that acceptance rate,
02:00the number of applications and kind of look past this downgrade.
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