CHICAGO - The University of Missouri Curators sold $150 million of new-money taxable bonds Monday with tentative plans to return the market next year to fund another $100 million in approved projects.
Bank of America Merrill Lynch and Morgan Stanley were the senior managers. Prager & Co. LLC advised the university and Thompson Coburn LLP was bond counsel.
Ahead of the sale, Moody's Investors Service affirmed the university's Aa1 rating and Standard & Poor's affirmed its AA-plus rating. The bonds were sold under the university's system facilities revenue bond credit. The system has $2 billion of outstanding bonds and commercial paper authorization under the credit.
"We expect that, during the next two years, the university system, including the university medical alliance, will continue to produce positive operating results on a full-accrual basis and that unrestricted net assets relative to debt and expenses will likely remain consistent with the rating category," Standard & Poor's analyst Debra Boyd said in the agency's report.
The University of Missouri system includes 45 colleges, schools, and divisions, and serves approximately 75,000 students on four campuses in Columbia, St. Louis, Kansas City, and Rolla. Columbia is the flagship campus.
"The system is well managed and has a history of positive operations, despite volatility in state funding," Moody's wrote. "Growing total cash and investments provide good coverage of operations. However, the system is relatively leveraged and has limited additional debt capacity at this rating level."
Healthcare operations contribute positively to operations, but analysts said they require careful cost and risk management. The system's research profile is smaller than rated peers and other flagship institutions, and will remain challenged to grow in the current highly competitive funding environment, Moody' added.
The school benefits from $1.8 billion in monthly liquidity and a conservative, mostly fixed-rate debt structure. A diversified revenue base helps insulate the university from sharp declines in any one revenue source.
