In the week’s largest municipal bond sale, the Dormitory Authority of the State of New York will sell $238 million of debt for the State University of New York.
Ramirez & Co. will price the lease revenue bonds on Tuesday, with retail pricing on Monday.
The bonds will be structured as serials, with maturities from 2013 through 2032, and a term bond maturing in 2037 and 2042.
Proceeds from the bonds will go toward constructing and rehabilitating residence facilities at campuses across the state, said David Doyle, a spokesman for SUNY.
About $69.4 million will go toward renovating east campus housing at Binghamton University, and another $69 million will go toward constructing a new residence hall and a dining facility at Stony Brook University.
Other projects include a new residence hall at SUNY Cortland and new housing at SUNY Fredonia.
A portion of the proceeds will be used to refund some of DASNY’s outstanding lease-revenue bonds.
The bonds are special obligations of the authority, payable primarily from SUNY’s revenues, which include rents, income and profits from the university’s facilities.
Although facility revenues secure the bonds, Standard & Poor’s views the bonds as a general obligation of SUNY, and assigns a AA-minus rating with a stable outlook.
The GO pledge is supported by the university system’s history of operating and capital support provided by the state, its large size and solid demand, and historically balanced operations, Standard & Poor’s said in a report.
“The stable outlook reflects our expectation that over the next two years operations will continue to generate deficits on a full accrual basis, balanced by stable enrollment and the state’s commitment to a tuition plan that allows for tuition revenue growth and flexibility,” analysts said.
Standard & Poor’s said a positive rating action during the two-year outlook period is unlikely due to the university’s dependence on state operating funds and the current rating on New York State: AA with a positive outlook.
Moody’s Investors Service also cited the university’s stable enrollment base as a credit strength, along with strong demand for student residential facilities, and a large, diversified operating base.
The agency assigned a Aa2 rating, which “reflects the general obligation pledge for the bonds and SUNY’s role as one of the largest U.S. public university systems, serving the state of New York.”
SUNY was created in 1948 and consists of 29 state-operated campuses, and five contract colleges, including Cornell and Alfred universities. The university system serves nearly 500,000 students, most of which are New York residents.
As of August this year, SUNY’s management reported that it had $1.32 billion of outstanding lease revenue debt.
