Amherst College in Massachusetts was downgraded by S&P yesterday.? The prestigious liberal-arts college saw its debt slide from AAA to AA+ because of the losses it suffered after the financial crisis.??
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From a Bloomberg article by McDonald and Chappatta (21 Sep 2012):
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Amherst has been seeking to recover from the crash, when it suffered deep investment losses and was left short of cash because of its holdings of hard-to-sell assets such as private equity funds. Harvard University and at least 14 other elite universities sold taxable bonds after the crisis to have sufficient cash on hand. Amherst borrowed $100 million in 2009.
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The college, which counts Nobel Prize-winning economist Joseph Stiglitz as an alumnus, is restarting stalled projects, including a $244 million science center, S&P said. It?s preparing to sell an additional $100 million of taxable bonds, significantly increasing its debt burden, which consumes 11.9 percent of its operating expenses, the New York-based rating company said.
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For discussion:
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Why is the credit rating so important to borrowers like Amherst college?
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