Michigan State University today will price $229 million of general revenue bonds to refund outstanding variable-rate debt and commercial paper and pay termination fees related to interest rate swaps.

The transaction follows the school’s sale last month of $205 million of taxable Build America Bonds to finance various capital projects. The 40-year BABs captured an interest rate of 6.173%.

Proceeds from today’s refunding will allow MSU to eliminate some risk in its debt portfolio by lowering the amount of its variable-rate debt, which now makes up 91% of its debt portfolio, and terminating some of its 15 interest-rate swaps.

As part of the restructuring, the university could enter into one or more new basis swaps, in which it both pays and receives a variable rate. It plans to keep in place its three current basis swaps, according to bond documents.

Bank of America Merrill Lynch and JPMorgan are underwriters on today’s sale. Miller, Canfield, Paddock and Stone PLC is bond counsel.

Moody’s Investors Service gives a Aa2 to the school’s debt, which totals around $850 million. Moody’s maintains a negative outlook on the credit, due in part to risks associated with its debt portfolio and Michigan’s economy.

Standard & Poor’s rates it AA with a stable outlook.

One of Michigan’s co-flagship universities, MSU’s main East Lansing campus is also one of the nation’s largest.

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