Cazenovia College defaults on $25M bond payment
Cazenovia College defaults on $25 million bond payment
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Cazenovia College, a nonprofit institution in New York, has defaulted on a $25 million bond after failing to pay the amount due Sept. 1. The College noted it lacked “sufficient liquid resources” to pay for debt.
In 2019, the college borrowed $25 million via bonds from the Madison County Capital Resource Corp— falling further into debt years after.
However, the college was given an extension of a month and still couldn’t pay the balance. This is one of many ongoing issues higher education institutions are facing a lack of enrollment since the pandemic began with a 9.4% decline.
Cazenovia enrollment has fallen by 41% as of Fall 2022.
“Where we have seen the most credit pressure in the sector in recent years has been in institutions that look similar to this,” said Emily Wadhwani, a senior director at Fitch Ratings to Higher ED Dive. “This is, unfortunately, an institution that has had continuous enrollment pressures that really preexisted the pandemic.”
Although Cazenovia College continues to operate, in 2021 the institution reported $2 million loss, but many are concerned with the College’s ability to meet the next deadline Nov. 3 to come to an agreement with bondholders.
“A default in and of itself is not necessarily a predictor of closure, but it certainly indicates that we are at a point of limited financial capacity for continuation,” Wadhwani said. “Without a forbearance agreement, without a resolution with bondholders — that certainly can push the decision to close over the edge.”
Let’s not forget that other institutions have had to close like Ohio Valley University last year. The reasons for this closure were due to financial challenges and bankruptcy. Ohio Valley University is currently for sale.