Moody's snips APEI

Moody's Investors Service said it downgraded American Public Education, Inc.'s senior secured first-lien bank credit facility, including revolver and term loan to B2 from B1 and the company's speculative grade liquidity rating to SGL-2 from SGL-1. The agency also lowered its corporate family rating to B2 from B1 and its probability of default rating to B2-PD from B1-PD.

"The downgrades to B2 from B1 reflect our expectation for continued pressure on APEI's profitability and credit metrics throughout the next several quarters given the enrollment challenges at Rasmussen University (RU), specifically in the pre-licensure nursing programs," said Oleg Markin, a Moody's AVP and analyst, in a press release."

"Tighter admissions standards and enrollment caps at certain RU locations, along with higher operating costs and faculty shortages will drive APEI's debt-to-EBITDA leverage (Moody's adjusted) from 3.5 times as of Dec. 31, 2022 to around five times at the end of 2023," added Markin.

Positively, Moody’s noted APEI’s efforts to pay down debt, including more than $70 million or 43% of outstanding term loan debt repaid in 2022, and the solid performance at its other schools.

The outlook is stable.

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