The Texas Student Housing Authority has filed for bankruptcy protection, listing between $10 million and $50 million of liabilities.
The non-profit, state chartered corporation had assets of $1 million to $10 million, and as many as 199 creditors, according to a Bloomberg report.
Commenting on the situation, Matt Fabian, a partner at Municipal Market Analytics said: “Both schools have had troubled muni-financed private student housing projects for years. So while the pandemic has made student housing financial conditions more challenging generally, that’s not the whole story when it comes to these schools.”
The purpose of Chapter 9 is to provide protections for financially-distressed municipalities from their creditors so they can develop and negotiate a plan for adjusting debt.
He added: “The sector has lingering issues, but we shouldn’t overstate the risks via this new bankruptcy.”
Across the U.S., bondholders are betting on the resurrection of American campus life after a year of declining enrollment, online classes and vacant quads. Student housing bonds, which came under pressure during the pandemic, are now traded with “substantially more optimism,” Fabian said.