Duke University is expected to sell $280 million of revenue bonds next Wednesday, representing the largest tax-exempt deal from North Carolina so far this year.
The debt will retire $110 million of taxable and tax-exempt commercial paper and provide $162 million for capital projects. They will be sold by the North Carolina Capital Facilities Agency.
The Series 2009B bonds are rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s.
JPMorgan will be lead underwriter with Barclays Capital Inc. as co-manager. Robinson Bradshaw & Hinson PA will be bond counsel and Prager, Sealy & Co. will be financial adviser.
Duke’s credit ratings benefit from a selective acceptance rate and from generous students who give back after graduation, according to Moody’s report.
The university accepted 21% of applicants in the fall of 2008, a record-low acceptance rate, analysts said, and students paid a net tuition average of $23,576 in fiscal 2008, reflecting large enrollments in the business, law, and health schools. Private philanthropy has produced an average of more than $320 million in annual gift revenue over the past three years.
Duke’s market strength has not insulated it from the recession. Its investment portfolio lost 23% in the second half of 2008, according to Moody’s. The losses have forced Duke to scale back spending and rely more on leverage to finance capital projects.
The university completed a $500 million taxable sale on Jan. 22 that Moody’s expects will be used mostly as “working capital reserves.”
