DALLAS — Texas A&M University System will take advantage of its triple-A ratings in a competitive sale of Permanent University Fund new money and refunding bonds.
Bids will be taken April 2 through the Ipreo Parity system.
Maria Robinson, treasurer for TAMUS, is leading the issue with First Southwest Co. senior vice president Mary Williams as financial advisor.
The bonds will be almost evenly split between a tax-exempt Series A and a taxable Series B.
Bond proceeds will provide about $195 million of new money for two large capital projects, and refund all or part of outstanding series 2006 PUF bonds for savings.
After this sale, TAMUS will have about $810 million of outstanding PUF bonds. The bonds are backed by the Permanent University Fund that supports the University of Texas and Texas A&M systems.
PUF bonds are secured by a first lien and pledge of Texas A&M University System's one-third interest in distributions from the PUF, with ultimate access to the value of the Permanent University Fund for debt repayment. TAMU's debt issuance is limited to no more than 10% of the value of the PUF, excluding the value of PUF Lands.
The market value of PUF investments excluding land totaled $18.04 billion at Feb. 28, 2015, up from $17.2 billion as of June 30, 2014, according to Standard & Poor's. The PUF's one-year investment returns were 15.11% at fiscal year-end 2014, compared with 8.8% at fiscal year-end 2013.
"Healthy long-term investment performance, with a low correlation to energy prices, upside potential for revenue generation, and constitutional limitations on additional debt issuance and spending from the PUF mitigate risks associated with volatility of oil prices," said Moody's Investors Service analyst Mary Kay Cooney.
The new money proceeds will be used for projects, including expansion of the veterinary school and Engineering Education Complex.
A&M officials broke ground on the $120 million veterinary center a year ago. The project is the second largest on the College Station campus behind the $450 million of the Kyle Field football stadium expansion.
The capital project represents a major expansion for the Texas A&M College of Veterinary Medicine & Biomedical Sciences, which is the training ground for the state's veterinarians.
"In 2016, we will be celebrating our 100th anniversary," said Dr. Eleanor Green, dean of veterinary medicine. "It would be outstanding if we were able to step into our new facilities as we step into a new century."
The TAMUS capital improvement program includes $2.1 billion of projects through 2019. In addition to revenue finance system and PUF bonds, the plan will include public-private partnerships, according to Moody's.
The refunding of 2006 bonds comes less than three months after TAMUS refunded $377 million of 2005 bonds in January.
Established in 1948 as an extension of the flagship campus in College Station, the Texas A&M University System includes 11 universities, seven state agencies, two service units and a comprehensive health science center. Enrollment across the system is more than 131,000 students. With more than 28,000 faculty and staff, the A&M System has a physical presence in 250 of the state's 254 counties and a program presence in every one.
