The Dormitory Authority of the State of New York is scheduled on Tuesday to sell $143 million of revenue bonds for the Rochester Institute of Technology, an independent, not-for-profit institution of higher education located in Rochester, N.Y.

“We’ve been modeling it at $135 million, but this week the market improved even more and so it’s about $143 million at present,” said James Watters, senior vice president of finance and administration.

Around $85 million of the proceeds will go toward refunding DASNY’s revenue bonds issued for Rochester in 2002 and 2008.

Watters said they’re expecting about 2.5% in interest rate savings from the 2008 refunding, and 1.5% in savings from the 2002 refunding.

Around $58 million will be used for the expansion and renovation of Rochester’s health and science facilities, improvements to electrical infrastructure, laboratory renovations, and the construction of the Gene Polisseni ice arena.

Construction on the 4,150-seat arena began on Oct. 19 and is expected to be complete in two years. The total cost for the multi-purpose facility is estimated at $37 million.

Around $25.5 million of proceeds from Tuesday’s bond sale will go toward the arena, with the remainder funded by gift proceeds and equity from the institution.

“The Gene Polisseni Center will allow us to accommodate our fans and attract prominent teams from across the nation to play the Tigers on campus,” RIT President Bill Destler said in a statement.

“The arena will also be a wonderful venue for the Rochester community to converge on the RIT campus.”

The revenue bonds will be structured as both serial and term and will be subject to early redemption.

RBC Capital Markets is the lead underwriter and, according to Watters, influenced the timing of the deal.

“They provided us with the guidance that doing the deal during the short week of Thanksgiving is actually a very good time to consider it, given the reduced deal flow and the fact that we’re such a great credit,” Watters said.

Moody’s Investors Service has assigned the new bonds an A1 rating with a stable outlook, based on RIT’s stable market position, strong management team, positive operating performance, and solid balance sheet with moderate leverage.

“RIT’s demand is highlighted by strengthened selectivity, stable yield on applicants, and continued enrollment and net tuition growth,” analysts said in a report.

Offsetting these strengths are a highly competitive student market and the institute’s ability to grow revenue and balance sheet resources.

Yields on DASNY’s last sale of RIT revenue bonds in Oct. 2010 ranged from 0.6% with a 3% coupon in 2011 to 4.2% with a 5% coupon in 2040. The bonds were rated A1 by Moody’s.

The bonds are secured by RIT’s pledged revenues, which include tuition and fees charged to students.

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