Louisiana State University plans to tap the municipal bond market this week to refund some outstanding debt.
Underwriter Raymond James plans to price the auxiliary refunding revenue bond deal Thursday, with maturities from 2027 to 2036, according to
The $59.6 million deal will current refund bonds issued in 2016.
LSU's auxiliary revenues are self-supporting enterprises designed to generate revenues sufficient to maintain their operation, according to the deal's preliminary official statement.
"Entities that will benefit from this are the LSU student union, athletics, residential life, university rec, parking and transportation," LSU Chief Financial Officer Tommy Smith told the university's Board of Supervisors in February before they approved the bond sale.
The university has $270 million of parity debt outstanding, including the bonds that will be refunded with this week's deal.
The refunding is expected to generate $3.8 million in gross debt service savings, staff reported to the Louisiana Bond Commission Thursday, when it approved the deal on a voice vote.
The goal is about $3.35 million in present value savings, according to the bond commission staff report, which would represent 5.394% PV savings on the Series 2016A tax-exempt bonds up for refunding.
Foley & Judell is bond counsel.
The deal carries ratings of A2 from Moody's Ratings and A-plus from Fitch Ratings. Both assign stable outlooks.
Fitch also affirmed LSU's issuer default rating at AA-minus.
"LSU benefits from strong student demand, significant fundraising ability, relatively steady state support in recent years, and substantial research grant revenue," Fitch analysts said in a release. "The university continues to build its primarily in-state, undergraduate student base, in addition to expanding out-of-state enrollment. Fitch expects this overall enrollment trend to persist, which underpins further expansion of system operations."
Moody's maintained its A1 issuer rating for LSU, which "reflects the university's excellent brand and role as the state's flagship university, its relatively large scale, and solid financial reserve cushion to operating expenses."
LSU's operating margins are generally narrow compared to peers, Moody's said, but remain stable — in the range of 10% — over the past three years.
"Revenue growth through fiscal 2025 has been somewhat constrained given state limitations on pricing authority, a credit challenge, though approval for tuition increases, combined with continued enrollment gains in fall 2025 will support healthy fiscal 2026 revenue growth," the rating agency said, adding that leverage, including debt and the university's share of the state's unfunded pension liability, is elevated compared to peers.
On the other hand, LSU benefits from "strong donor support," Moody's said.
Fitch cited LSU's "strong student demand, significant fundraising ability, relatively steady state support in recent years, and substantial research grant revenue," saying it continues to build its primarily in-state undergraduate student base, in addition to expanding out-of-state enrollment. Fitch expects this overall enrollment trend to persist, underpinning further expansion of system operations.
At LSU, undergraduate enrollment topped 35,000 in the fall of 2025, up from 29,273 in the fall of 2021, according to university data published in the POS. Freshman applications more than doubled from 2019 to 2025, to 57,669, and the number of matriculating freshmen was up more than 36% in that period, to 9,376.
In September, the Louisiana Public Facilities Authority sold
Higher ed sector
In general, municipal bond analysts see a murky future for higher education credits, though the picture is brighter for name-brand institutions like Louisiana State.
In a recent
Moody's has a negative outlook on the higher education sector, but said larger institutions with strong brands — LSU would be an example — are better equipped to manage the "demographic cliff" of fewer college-age students in a world where smaller universities struggle to compete for a declining student pool.
Fitch anticipated a "deteriorating" higher education sector outlook for 2026. "Revenue growth prospects remain strained, particularly for net tuition, as the domestic undergraduate student base shrinks and international students face multiple obstacles," the rating agency said in its sector report in December.
S&P Global Ratings revised its outlook on the sector for 2026
Furthermore, all of its higher ed downgrades in 2025 were of private schools.
S&P's sector report, published in December cited federal research funding cuts as a drag on the higher ed sector.
"Cuts to federal research funds could be coupled with caps on federal reimbursement for indirect costs, which in our view, would create material operating pressures for higher-rated research universities," the rating agency said.
In the preliminary official statement, LSU included a broadly worded statement about the Trump administration's range of policy actions, saying the board of trustees "cannot predict ultimate outcomes and effects thereof on the university."
The university has
According to that website, such so-called F&A cuts could "hinder LSU's growth as a leading research institution," threaten funding for critical research centers, such as those in the biomedical area, weaken LSU's ability to attract the best and the brightest faculty and students, and "jeopardize LSU's goal of achieving Top 50 research university" status.
