CHICAGO — Indiana's Purdue University will sell $58 million of student-fee bonds Wednesday in the first of two August deals to raise money for capital needs.

The borrowing comes a few months before Gov. Mitch Daniels is set to leave office and take over as the university's new president.

Purdue is one of the nation's few higher-education institutions rated Aaa by Moody's Investors Service. Standard & Poor's rates the university AA-plus with a stable outlook. Both agencies affirmed the ratings ahead of this week's deal.

The university plans to return to market the last week of August to price $43 million of revenue bonds that are backed by parking and housing revenues, according to Denise Laussade, director of the office of treasury operations.

Purdue goes to market frequently but not typically with large issues, Laussade said. "Over the last six or seven years, we've gone as much as three times in a year," she said. "Some schools issue their whole capital needs in one issue, while ours is much more project related."

Proceeds from this week's deal will be used for a variety of projects, including the last piece of financing needed to complete a $98 million renovation of a student fitness building, and $20 million for a research building.

The Big Ten school has $1.1 billion of outstanding debt, including commercial paper, and limited capital needs after this month's borrowing, according to Laussade. The school will lobby the Indiana General Assembly for state aid when legislators reconvene in January.

Barclays Capital is the senior manager on the late-August $43 million deal. Laussade said officials remain confident in the bankers despite the London Interbank Offered Rate scandal that has preoccupied the British bank for the last few months.

"We've done our diligent review of them and find that unfortunately, the Libor thing is more pervasive than just one entity," she said. "We're very comfortable with the bank and its effectiveness."

Morgan Stanley is the senior manager on this week's deal. Loop Capital Markets and Cabrera Capital Markets LLC are co-managers.

Ice Miller LLP is bond counsel and John S. Vincent & Co. is financial advisor.

The bonds, which are fixed rate and mature in 20 years, are backed by all student fees, including tuition. Based on 2010 and 2011 student-fee collections, debt-service coverage is expected to be around 12 times, according to bond documents.

The school's strong ratings reflect its reputation, market position, historically strong operating performance and robust financial resources, Moody's said.

"The stable outlook reflects Purdue's continued established market position for student demand and research activity, favorable operating margins and moderate additional debt with ongoing state fee-replacement appropriations representing a significant portion of the university's debt," analyst Diane Viacava wrote in a report on the upcoming deals.

A block of tax-exempt student-fee bonds sold in 2010 with a 2017 maturity and 5% coupon yielded 1% in recent trading, according to the Municipal Securities Rulemaking Board's website. Bonds with a 2021 maturity and 5% coupon were yielding 1.77% in trading last week, down from 3.2% last October.

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