Ivy Feeder Boasting Presidential Alumni Preps $54 Million Bonds

(Bloomberg) -- Phillips Academy Andover, a top prep school that counts two former US presidents among its alumni, is tapping the municipal bond market to pay off existing debt.

Andover is slated to issue $53.7 million of bonds through the Massachusetts Development Finance Agency on Thursday, preliminary documents show. Proceeds of the offering will be used for refinancing and terminating an interest-rate swap, as well as paying for issuance costs, according to the prospectus. 

The alma mater of both Presidents George H. W. Bush and George W. Bush, Andover joins a smattering of private schools that have come to the state and local debt market of late. Earlier this summer, St. Ignatius College Preparatory sold muni bonds in California to revamp its campus, while Massachusetts’ the Wheeler School raised debt in April. 

Private schools aren’t frequent issuers in the muni market. But more top-tier institutions have been testing the waters as they look to expand their campuses and refinance debt as college admissions anxiety drives more applicants to elite feeder schools. Andover has top-tier credit ratings from both Moody’s Ratings and S&P Global Ratings, bolstering an endowment over $1 billion — more than many colleges. 

“The rating reflects our view of Andover’s extremely strong enterprise risk profile with an excellent market position and longstanding reputation as one of the nation’s oldest boarding schools,” wrote Amber Schafer, a credit analyst at S&P.

School officials declined to comment on the upcoming offering.

Parents that can swing Andover’s $74,000 boarding school tuition are expecting to give their high schooler a leg up on entry to the top US colleges and universities. Some 45% of students receive some form of financial aid, according to Andover’s website.

As one of the most elite prep schools school in the US, Andover was established in 1778 and touts an average class size of just 13 students. In addition to two former presidents, its alumni include novelist Julia Alvarez, artist Frank Stella as well as Wall Street elite like financier Oscar Tang and private equity billionaire Teddy Forstmann.

The selective school admitted just 13% of applicants for its fall 2024 class and nearly 75% of the 1,167 students enrolled will board on its 500-acre campus, according to bond documents. 

The school’s endowment was valued at about $1.4 billion at the end of June. In fiscal 2024, the school reported $76.3 million in operating revenue — excluding its endowment draw — and $135.9 million in expenses, which was an increase from $125.6 million the year before. The school attributed the jump in expenses to unplanned costs to repair damage from severe weather and inflation. 

--With assistance from Sam Hall.

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