LOS ANGELES -- The University of Washington is planning to sell $143 million of general revenue bonds next week to finance capital improvements for its facilities, including the renovation of its football stadium.
The deal is expected to price on Tuesday, with a retail order period on Monday, according to Bill Starkey, associate treasurer at the university.
JPMorgan is the lead underwriter and Pacifica Law Group LLP is bond counsel.
Capital improvements that will receive financing include a housing and dining system expansion, construction of the new Husky Ballpark baseball stadium, and the renovation of the football team's Husky Stadium, which is expected to be completed this year.
Proceeds will also go toward repaying approximately $20 million of commercial paper.
Renovation of the football stadium began in 2011 and is estimated to cost around $250 million. The improved Husky Stadium will have luxury seating, seats closer to the field, and a new football operations center attached it. The football team played at the Seattle Seahawks' CenturyLink Field in 2012.
The project is being funded by approximately $50 million in major gift contributions and $200 million from 30-year bonds. Approximately $14.3 million in new revenues each year will be needed to pay off the debt, which will come from naming rights, increased ticket revenue, and premium seating opportunities.
Next week's deal will be structured with serial bonds maturing in 2014 through 2041. They will be secured by general revenues of the university, including student tuition and fees, grants, and investments.
The bonds received a triple-A rating from Moody's Investors Service and a AA-plus rating from Standard & Poor's, which also revised the outlook to positive from stable.
"We're certainly very pleased with the positive outlook," Starkey said. "And we certainly hope that it will improve our interest rate."
Standard & Poor's said the positive outlook reflects the growing credit strength of the university over time. The agency expects continued improvement in the enterprise and financial profile over the outlook period to one that could become consistent with other AAA-rated universities.
"This includes our expectation of continued strength at UW Medicine, which has margins of 4% to 5% despite upcoming health care reform, as well as positive operations for the overall university, sustained sponsored research revenues, improving state appropriation funding, and solid enrollment and demand metrics," said Standard & Poor's credit analyst Jessica Matsumori. "We also anticipate that upcoming debt issuances will be modest and staggered, with outstanding principal remaining level, at approximately $2.2 billion for the next several years."
The AA-plus rating is based on the university's position as one of the nation's top research universities, its diverse revenue base, solid enrollment and demand, and manageable annual debt service.
Moody's rated the bonds a notch higher and assigned a stable outlook.
"The Aaa rating reflects the university's standing as a leading research organization as well as the state's flagship and major healthcare provider, strong governance and favorable financial position, offset by rising debt and growing exposure to healthcare and federal research funding," analysts said a report released Wednesday.
Analysts said they expect continued strong research profile, solid student demand, good gift revenues, and manageable near-term borrowing plans.
