DALLAS - Arizona State University is bringing $277 million of revenue bonds to market Feb. 3 with a lowered outlook on its AA rating from Standard & Poor's.
"The negative outlook reflects our opinion that ASU's plans for up to $340 million in new debt during the next two years will pressure financial resources that we already view as weak for the rating category," analyst Jessica Wood wrote in a Jan. 26 report.
The upcoming bonds will include money for work on Sun Devils Stadium on the Tempe campus, a project that is expected to cost $210 million.
Moody's Investors Service affirmed its Aa3 rating on Jan. 13 and maintained a stable outlook.
"ASU's highest Aa3 rating (on System Revenue Bonds or SRBs) reflects its role as a large and growing comprehensive public university with a healthy student market and research profile, in addition to solid operating performance," Moody's analyst Mary Kay Cooney explained.
"Offsetting challenges include substantial leverage and narrow reserves relative to debt, in addition to weak state support for operations," she added.
The upcoming deal includes $276.9 million of Series 2015A tax-exempt and $14.4 million of taxable Series 2015B system revenue and refunding bonds issued in the name of the Arizona Board of Regents.
The new money portion of the deal will go toward a new law school facility in downtown Phoenix to replace the Tempe school, renovation of the psychology building at the Tempe campus, and installation of new IT infrastructure on various campuses of the University.
Phase I of the Sun Devil Stadium renovations and improvements is expected to begin this spring.
