The Dormitory Authority of the State of New York is expected to issue $86 million of New York University revenue bonds on Thursday.
The deal includes $54.9 million of tax-exempt Series 2012B bonds and $31 million of federally taxable Series 2012C bonds.
“The taxable series will allow NYU to allocate proceeds to costs associated with those portions of the project in which there may be future unrelated business use,” said Beau Duffy, public information officer for DASNY.
Both series of the bonds will be structured as serial and term and will be subject to redemption.
Bank of America Merrill Lynch is lead underwriter and bond counsel is Nixon Peabody LLP.
Proceeds from the sale will be used to refund a line of credit that financed the construction of the New York University Global Center for Academic and Spiritual Life.
“Construction is complete, and classes, activities and events have been held in the building since the start of the semester,” NYU’s vice president for public affairs, John Beckman, said in an email.
The center, located on Washington Square South and Thompson Street in Manhattan, includes spaces for religious observance, offices, classes, musical rehearsals and conferences.
Moody’s Investors Service rates the Series 2012 bonds Aa3 and Standard & Poor’s assigns an equivalent AA-minus. Both agencies assign stable outlooks.
“The ratings reflect low financial resources and a high debt level for the rating category, which are mitigated by the university’s comprehensive nature and global presences,” S&P analysts said in a report.
Negative rating actions could be triggered by decreases in financial resources relative to expenses and debt from current levels, analysts said, adding that a positive rating action is unlikely during the next two years.
The bonds are a general obligation of the university’s academic component, which is composed of the Washington Square campus and the NYU School of Medicine, exclusive of the NYU Hospitals Center, and the Polytechnic Institute of NYU, according to S&P.
The university has issued around $492 million of debt and expects to to issue more, but at a slower pace.
DASNY last issued revenue bonds for New York University — also rated Aa3 by Moody’s and AA-minus by S&P — in March, selling $208.6 million of new-money and refunding revenue bonds as Series 2012A. Yields ranged from 0.5% with a 2.5% coupon in 2014 to 3.87% with a 5% coupon in 2042. Credits maturing in 2013 were offered via sealed bid.
NYU, founded in 1831, is a private, comprehensive nonprofit university in New York City. It is one of the largest private institutions in the nation with more than 55,000 students in fall 2011.
