Moody’s Investors Service Tuesday revised its outlook for Gonzaga University’s debt to stable from negative, based largely on the its efforts to “significantly reduce” exposure to variable-rate debt.

Moody’s affirmed its underlying A3 and assigned the rating to the Spokane-based university’s forthcoming $53.5 million bond sale, which will be issued through the Washington Higher Education Facilities Authority.

Gonzaga will use the new fixed-rate bond issue to refund letter-of-credit backed variable-rate bonds issued in 2008, pay for the cost of issuance, and to finance the termination of a swap agreement associated with the 2008 bonds, Moody’s said.

The transaction will eliminate all the university’s outstanding puttable debt, according to the rating agency. It will have six remaining swaps.

Gonzaga’s 2009 fall enrollment is expected to top 6,900 full-time equivalents.

The bonds will be underwritten by Wells Fargo and Barclay Capital, and are expected to price in late September or early October, according to a staff report prepared for the facilities authority by its financial adviser, Springsted Inc.

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