CHICAGO — Ohio State University said demand for its $114 million of refunding bonds last week was nearly triple the size of the issue and that it will save $12 million in interest cost over the 20-year life of the debt.

The university saw an all-in interest rate of 2.32% on the debt, down from 4.06% on the original bonds. There were more than $325 million of orders for the $114 million offering, an OSU spokesman said Friday.

The deal comes less than a year after OSU issued $500 million of so-called century bonds, which feature a 100-year maturity —  the first for a public university. Proceeds from the taxable bonds were used in part to finance a $1 billion expansion of the Ohio State University Medical Center, one of the largest construction projects in Ohio.

Marking another first for a public university, OSU one month ago closed a controversial deal to privatize its parking system.

The school will lease its parking system for 50 years in return for a $483 million payment from the concessionare, Australia-based QIC Global Infrastructure and LAZ Parking.

Proceeds from the privatization will be put toward academic programs with $84 million used to defease outstanding bonds backed by parking revenues.

Morgan Stanley was the underwriter on last week’s refunding.

“This transaction is another step in Ohio State’s overall strategy of finding new and creative ways to streamline expenses and generate new revenue to fund its core academic mission of teaching and research,” OSU chief financial officer Geoff Chatas said in a statement. “We continue to see very strong investor demand for the Ohio State University name.”

Moody’s Investors Service rated the refunding bonds Aa1, while Standard & Poor’s and Fitch Ratings rate them  a notch lower at AA. The bonds featured a final maturity of 2033.

Yields on $92.1 million ranged from 0.33% with a 2% coupon in 2013 to 3.06% with a 4% coupon in 2030.

Yields on the second series, $23.2 million of taxable debt, ranged from 0.476% to 3.673%. The bonds had spreads ranging from 25 basis points to 110 basis points above the comparable Treasury yields.

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.