The Dormitory Authority of the State of New York will issue $260 million of Series 2011A lease revenue bonds on Tuesday through negotiated bid.
Proceeds from the bonds, which will first price for retail investors Monday, will benefit State University of New York dormitory projects, fund capitalized interest, and pay issuance costs.
About $180 million will finance new construction at Binghamton, Albany, and Cortland campuses, and $80 million will finance renovations.
The lease revenue bonds, which are a general obligation of SUNY, mature from 2011 to 2040, according to the preliminary official statement. No swaps or insurance is involved.
Moody’s Investors Service rates the bonds Aa2; Fitch Ratings and Standard & Poor’s rate them AA-minus. The outlooks are stable.
Fitch said its rating reflects SUNY’s statewide educational dominance, diverse funding base, strong capital support from New York state, and solid debt-service coverage provided by residential facility charges.
“While all SUNY dormitory facilities issues, including the bonds, represent a general obligation of SUNY, the system anticipates that income from residential facilities will be more than sufficient to cover pro-forma debt service,” Fitch said in its report.
Offsetting credit factors include the risk associated with the system’s hospitals and the effect on SUNY’s financial performance, and the impact state budget-balancing measures will have on the system, Fitch said.
The agency said key rating drivers include maintenance of sound debt-service coverage from rents and fees associated with residential facilities; gradual improvement in operating margin over time, partially driven by measures to stabilize hospital financial performance; and the continuing adequacy of state capital funding.
Siebert Brandford Shank & Co. and Ramirez & Co. are the lead underwriters. Nixon Peabody LLP is bond counsel. Arent Fox LLP is counsel for the underwriters.
Lamont Financial Services Corp. of Wayne, N.J., is DASNY’s financial adviser for the deal.
The SUNY system consists of four university centers — Albany, Binghamton, Stony Brook, and Buffalo — four health sciences centers, 13 university colleges, two specialized colleges, eight technology colleges, and five statutory colleges.
