DALLAS – The University of Texas System expects to save more than $6.5 million net present value in a $134 million refunding of revenue bonds.
The negotiated deal through book-runner Raymond James is expected to price the week of April 11, according to Terry Hull, associate vice chancellor for finance at the UT System.
"We anticipate very strong market reception for the System's highly-rated revenue financing system bonds in large block sizes," Hull said.
Raymond James senior managing director Thomas K. Oppenheim and managing director Debi Jones are lead bankers. The UT System serves as its own financial advisor.
Co-managers are Blaylock Beal Van, Stifel Nicolaus & Co., William Blair, and Drexel Hamilton.
"The system's robust financial reserves will continue to provide strong coverage of debt and operating expenses," said Moody's Investors Service analyst Karen Kedem in affirming the system's Aaa rating and stable outlook.
The UT System has two main bond channels: the Revenue Finance System that supports this month's this deal, and the Permanent University Fund that backed a series of recent bond issues.
Combined, those bonds come to about $8.9 billion, according to Moody's. PUF debt represents one-quarter of the system's portfolio.
The system's six-year capital plan calls for $6.3 billion of debt, of which $3.1 billion has or will be funded by Revenue Financing System. That figure also includes $1.1 billion in the form of Tuition Revenue Bonds that were approved by the 2015 Legislature, marking the first time in a decade that TRBs were authorized.
"We expect to have several new money and refunding transactions later this year," Hull said.
The UT System enrolls more than 221,000 students and treats more than 2.6 million patients across eight universities and six health institutions.
The system also has a substantial research enterprise that collectively recognized nearly $2.1 billion in annual expenses.
The strong state support recently showed some stress as two state leaders sent a letter to university officials demanding an explanation for recent tuition increases. UT approved a $152 increase to tuition and fees, effective in the fall, and another $152 increase to take place in fall 2017.
Lt. Gov. Dan Patrick and state Senate higher education committee Chairman Kel Seliger, R-Amarillo, demanded a response by the end of the month.
"We are alarmed at reoccurring reports that our state universities have increased or are considering proposals to raise tuition on students," the letter says. "These increases, combined with excessive bonus programs, indicate that our state universities have lost sight of their primary mission to provide a high quality education at an affordable cost to Texas families."
