CHICAGO — Indiana’s Purdue University will price $171 million of new-money and refunding bonds Thursday, and follow the sale with a $117 million borrowing in the next few weeks that will mark its fourth trip to market this year.

Purdue’s strong market position and stable finances won it an upgrade from Standard & Poor’s to AA-plus from AA ahead of the issue. The school enjoys a coveted Aaa rating from Moody’s Investors Service.

Thursday’s transaction will include $71.7 million of fixed-rate tax-exempt refunding bonds to achieve interest-rate savings and $100 million of taxable Build America Bonds to finance various capital projects.

The bonds are secured by a first lien on student fees.

“We wanted to get in a position to try to get in before an increase in year-end volume,” said Purdue’s financial adviser, John Vincent of Chicago-based John S. Vincent & Co. “There could be a lot coming in the next few weeks and we worked hard to get it ready to go this week.”

Barclays Capital is senior manager on the deal. City Securities Corp. and Loop Capital Markets are also on the underwriting team. Ice Miller LLP is bond counsel.

The school expects the refunding to achieve a net present-value savings of $4.5 million to $5 million, or about 8%.

“These are bonds we haven’t refunded up to this point due to negative arbitrage,” Vincent said. “But now we’re close enough to the call date that the savings greatly outweigh the negative arbitrage.”

The univesity tentatively has set Dec. 1 as the date to offer $117 million of student facilities debt.

The issue will refinance all of Purdue’s remaining long-term variable-rate debt into a fixed-rate mode, and include a series of new-money bonds as well.

In boosting its rating on the school, Standard & Poor’s said Purdue is anchored by fundamental credit strengths such as its position as Indiana’s flagship university, historically positive operating performance, manageable debt burden, and strong management.

“We believe that, because of these factors, Purdue is well positioned to manage through what is expected to be a constrained state funding environment,” analyst Susan Carlson wrote in a report on the upgrade.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.