Bidding for School Bonds

The Pennsylvania Higher Educational Facilities Authority on Wednesday will take bids for $99.4 million of public higher education revenue refunding bonds for the State System of Higher Education.

RBC Capital Markets is the financial adviser. Ballard Spahr Andrews & Ingersoll LLP is bond counsel.

The State System of Higher Education had planned to advance refund an additional $54 million of debt, but decided to pull that deal because current market conditions would not have produced enough savings. It expects the current refunding to produce debt service savings.

“They’re targeting for at least 4% [of net present-value savings], which would equate to about $4 million in savings,” RBC director Michael R. Baird said last week.

“If we match that or come in better, that’s what we’ll take,” said system treasury manager Joel M. Snavely. “The market’s so volatile right now, you never know what’s going to happen between now and [Wednesday].”

Moody’s Investors Service gives a Aa3 underlying rating to the debt. Fitch Ratings assigns it AA-minus. Standard & Poor’s did not rate the debt.

Bidders will have the option to purchase bond insurance. Baird said that in the past bidders have opted for insurance but it is uncertain whether the winning bidder will in this market.

The PHEFA last issued debt in July, $68.2 million of new-money bonds. Snavely said the system will likely issue more new-money debt in June.

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