CHICAGO - Ohio State University plans to enter the market Monday with the first of two bond issues totaling roughly $350 million that will kick off a $1.5 billion, six-year capital plan.

The university expects to enter the market Monday - or at some point next week - with $128 million of variable-rate demand bonds - and will follow that sale up with another $221 million of fixed-rate bonds near the middle or end of October, according to Alvin Rodack, associate treasurer for the school.

As other issuers have moved to delay their bond sales amid tumult in the markets, the university expects to go ahead but won't make a final decision until just prior to pricing, Rodack said.

"We'll go into next week planning to do the issue, and we'll do it unless there's a really good reason not to - [such as] if the market continues to have difficulty in attracting buyers," he said.

The finance team will also wait to determine the deal's final variable-rate mode until right before entering the market, Rodack said. The university typically issues variable-rate debt that is remarketed in the weekly mode, but will consider everything from quarterly to annually to commercial paper mode, he said.

"In this market, weekly may not be the best," he said. "We have the flexibility to do them all."

Ohio State is providing its own liquidity on the variable-rate bonds.

RBC Capital Markets and Fifth Third Securities Inc. are underwriters on the variable-rate bond issue. Morgan Stanley and SBK-Brooks Investment Corp. are senior managers on the fixed-rate issue, with Citi, Rice Financial Products Co., and Fifth Third co-managers. Brickler & Eckler LLP is bond counsel. The university does not use a financial adviser.

In advance of the sale, Fitch Ratings and Standard & Poor's affirmed their AA ratings with stable outlook on the university's outstanding $1.3 billion of debt, including the upcoming issues. Moody's Investors Service affirmed its Aa2 rating on the university's debt.

With a student population of more than 59,000, the state' flagship university enjoys a solid market position as well as a strong balance sheet anchored by state aid and revenue from the Ohio State University Health System.

The bonds will be backed by the gross receipts of the university. OSU's revenues totaled more than $2.5 billion in fiscal 2007, analysts said. Of that, $1.59 billion came from the OSU health system and another $452 million came from state appropriations. The state in 2008 and 2009 increased its share of aid to OSU and other public universities that agreed to freeze tuition for those same years under a program launched by Gov. Ted Strickland.

Risks to Ohio State's credit include its exposure to the volatile health care industry as well as the increase in debt planned over the next several years, said analysts.

The university next expects to enter the market in the next two to three years with up to $450 million in a mix of variable-rate and fixed-rate bonds for its capital program, Rodack said.

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