ATLANTA - About $66 million of variable-rate revenue bonds will be sold tomorrow for North Carolina State University at Raleigh as it works to fund new projects and refinance outstanding debt.
Moody's Investors Service assigned a Aa2/VMIG-1 to the deal. The short-term rating on the Series 2008A bonds is derived from the credit quality of the provider of the standby bond purchase agreement, Bank of America NA, and the likelihood of premature termination of the facility without a mandatory tender, according to Moody's. The outlook is stable.
The NCSU deal is rated AA by Standard & Poor's.
The debt is being issued by the University of North Carolina Board of Governors.
Lori Johnson, director of strategic debt management, said that last month the university sold roughly $26 million of Series 2008B debt. The university is in the midst of funding several capital projects, partly through debt.
The book-runner is Citi.
Officials note the debt will be backed by unrestricted general fund and unrestricted quasi-endowment fund balances, except for those that are derived from tuition charges, state appropriations, donor-restricted funds, and those satisfying obligations on prior bonds.
The university benefits from having access to an $11 million commercial paper line.
Johnson said that there are no immediate plans to go to market with a new issue again.
This bonds will initially bear interest in the weekly interest rate mode, said Moody's analyst Dennis Gephardt in a rating report.
Moody's expects NCSU will continue to experience near break-even operations as it has done over the past three years.
The university had entered into two swap agreements and two forward-starting agreements related to its Series 1999A and 2003B bonds and borrowing in 2008 with highly rated counterparties. As of April 30, the four agreements had a negative fair market value of $3.6 million, according to Gephardt.
Given the university's strong credit quality and $116 million of unrestricted financial resources relative to the derivative exposure, Moody's does not believe the swaps detract from the Aa2 rating, he said.
