As the University of Nebraska Medical Center prepared to sell $24.5 million of research center revenue bonds today, Standard & Poor’s revised its outlook on the AA-minus rating for the credit to positive from stable.

At the same time, the agency upgraded to A from A-minus about $50 million of University of Nebraska Board of Regents’ Memorial Stadium bonds issued in 2004.

Moody’s Investors Services has assigned a Aa2 rating to the new research center bonds.

Proceeds from today’s sale will finance construction of a second research tower on UNMC’s medical center campus in Omaha. The first tower was built in 2004 and a “tremendous demand” for medical research space has fueled the need for the second tower, said Scott Keene, vice president and managing director of Ameritas Investment Corp., which is acting as underwriter for the university.

The bonds will be secured with a combination of donations — pledged and future — as well as UNMC funds and university-wide funds, Keene said. The bonds have a 10-year maturity, with $10 million and $14 million payments scheduled for 2010 and 2018 to coincide with the expected receipt of gift pledges.

“The financing is bridging donations,” Keene said.

Standard & Poor’s assigned the AA-minus rating and revised outlook to the new bonds, citing growing enrollment levels and positive financial performance. Debt service levels that have grown to more than 2.3 times for the past two fiscal years are part of the reason for the upgrade of the stadium bonds, according to analyst Joshua Stern.

The raised rating affects about $50 million of outstanding debt and the revised outlook affects about $329 million of debt, excluding the new issue.

The university carries a total of $542 million of debt, including the new issue, which has led to “increased debt levels and more highly leveraged balance sheet,” Moody’s warned in its report accompanying the sale.


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