The Dormitory Authority of the State of New York approved the conversion of $450 million of auction-rate securities issued on behalf of the Memorial Sloan-Kettering Cancer Center to fixed-rate bonds, at its monthly board meeting yesterday.

Since Feb. 12, all of MSK's auctions of ARS have failed. The bonds have most recently reset at interest rates between 4.29% and 4.57%, according to the DASNY Web site. Prior to the new year, the bonds had been resetting at rates between 3.0% and 3.5%, according to DASNY documents.

The bonds were all insured by Ambac Assurance Corp., which was downgraded by Fitch Ratings to AA from AAA on Jan. 18. MSK seeks to eliminate the Ambac insurance and reissue the bonds under the current bond documents. If it is unable to do so, MSK intends to do a current refunding without insurance, according to DASNY documents.

The bonds were used to finance various capital projects at the center's campus in New York City and an ambulatory care center in Long Island.

Nixon Peabody LLP is bond counsel. Goldman, Sachs & Co. will lead manage the sale.

The conversion will be the first of DASNY's ARS issued on behalf of nonprofits. All of DASNY's auctions of auction-rate securities issued on behalf of 11 nonprofit medical and higher education institutions have failed since widespread market disruption began nearly three weeks ago, though some have since cleared.

DASNY also approved the sale of up to $150 million of 30-year tax-exempt bonds on behalf of Cornell University that will be used to refund tax-exempt commercial paper. Goldman Sachs and JPMorgan will lead manage the sale. Orrick, Herrington & Sutcliffe LLP is bond counsel.

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