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Moody's Investors Service Inc.

Moody's Affirms Eugenio Maria de Hostos Charter School's Ba1 Revenue Bond Rating

Strategic Insights

— 1 min read

The Moody's Investors Service has confirmed the Ba1 revenue bond rating for Eugenio Maria de Hostos Charter School (EMHCS) in New York, citing the school's moderate operational scale, satisfactory competitive position, and conservative financial planning. Despite ongoing credit challenges, including the need to enhance academic outcomes and boost student and staff retention, the stable outlook reflects the school's anticipated capital project improvements and relatively low charter renewal risk. Management is expected to maintain healthy financial operations and spendable cash levels, with an estimated $10.6 million in liquidity for the current 2025 fiscal year.

Key Takeaways:

  • The Ba1 rating reflects EMHCS's moderately-sized operating scale, satisfactory competitive position, and conservative financial planning.
  • Enrollment trends are positive, but continued growth is needed to reach full capacity.
  • Management estimates $10.6 million in spendable liquidity for the current 2025 fiscal year, equivalent to 213 days cash on hand.
  • Fiscal 2025 debt service coverage is projected at approximately 1.3x.
  • The school faces ongoing credit challenges, including the need to enhance academic outcomes and boost student and staff retention.
  • EMHCS has a relatively low charter renewal risk, supported by its consistent history of charter renewals from its authorizer.
  • The stable outlook reflects the school's anticipated capital project improvements and management's financial planning.
  • Sustained strengthening of competitive considerations, including enrollment and waitlist growth, and improved academic performance, could lead to an upgrade of the ratings.
  • Inability to meet enrollment targets, significant weakening of academic performance, and deterioration of cash levels or operating margins could lead to a downgrade of the ratings.

Statistics:

  • $52.4 million: approximate outstanding revenue-backed debt
  • 213 days: estimated spendable liquidity in days
  • 1.3x: fiscal 2025 debt service coverage projection
  • 5-year charter contract: current charter renewal period, valid through June 30, 2030
  • 6: number of times the school's charter has been renewed
  • $10.6 million: estimated spendable liquidity for the current 2025 fiscal year

Sources:

  • Moody's Investors Service. (2024). Moody's Ratings. [Source URL with exact format from original text]
  • Moody's Methodologies. (2024). US Charter Schools. [Source URL with exact format from original text]

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