BOSTON -- Independent college preparatory schools are now an important and growing part of the pool of municipal borrowers, according to a new report from Moody's Investors Service.

The report -- "Perspective on Higher Education; Credit Quality Characteristics of Independent Schools"--gives a generally positive assessment of the borrowing ability of small, independent primary and secondary schools.

The independent schools that Moody's rated fell in the Aaa to A ratings range, a showing that the credit agency attributed to closely knit administrations and wealthy students.

"We found that one of the biggest reasons for the relatively high ratings was due to small management teams that take a more hands-on approach to running the school," said Guy Logan, an analyst at Moody's. "These schools provide a service to a small niche of families with a generally high income."

Moody's decided to write the report, Logan said, because the schools have been borrowing more in the municipal market and are likely to continue to do so. One reason for this, he said, is that the schools are attracting students and making money, which gives them the flexibility to pay off debt. The report also said that the schools tend to be older than most and will probably face demand for new spending.

From a credit standpoint, small and exclusive schools have drawbacks as well as strengths, the report said. "These institutions are facing similar problems and concerns of liberal arts universities," Logan said. "The concerns that were voiced for these institutions were similar to their strengths."

The report said that while the number of people of high-school age has begun to increase after years of decline, only a small percentage will attend private schools. Because of this, schools may have to be more aggressive in attracting students. And while a small management team allows lower administrative costs and swifter responses to financial crisis, the departure of just one or two people can be crippling, Logan said.

But for the most part, the report concluded, the private college prep schools are strong credits in the municipal market with an "ample ability to generate financial resources."

Moody's assigned ratings to 24 private schools, 14 that issue debt backed by letters of credit or bond insurance, and 10 that do not use the backing.

The 10 were: the Albuquerque Academy; the Blake School in Minneapolis; the Brooks School in Andover, Mass.; Cranford Educational Community in Bloomfield Hills, Mich.; the Mary Institute St. Louis Country Day School; the New Mexico Military Academy; Phillips Academy in Andover, Mass.; Phillips Exeter Academy, in Exeter, N.H.; the St. Louis University High School; and the St. Paul Academy and Summit School, in Minnesota.

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