The Saginaw Valley State University Board of Control plans to enter the market this month with $39.8 million of public university revenue bonds, which it will use in part to refinance its outstanding auction-rate debt and make swap termination payments of about $1 million.

Proceeds will also be used to refund a series of fixed-rated general revenue bonds from 1998.

Located in the middle of Michigan’s Lower Peninsula, the 45-year-old Saginaw Valley State University is the youngest and fastest growing of the state’s 15 public universities. A total of 7,800 students attend the school.

In assigning an A rating to the bond issue, Standard & Poor’s noted that the university has a positive operating performance and stable to growing enrollment. “SVSU also reports adequate levels of liquidity for the rating category, with 2007 unrestricted net assets equal to 28% of expenses and about 25% of pro forma debt,” analyst Susan Carlson wrote in a release.

Moody’s Investors Service gave the bonds an A2 rating.

Several revenue streams — including tuition, fees, grants, gifts, and investment income — secure the bonds. State appropriations are not included in the security.

With the transaction, the university plans to terminate all three of its synthetic floating-to-fixed interest rate swap agreements for a total termination cost of around $1 million. The university will have 100% fixed-rate debt after the sale. Nearing the end of a $20 million capital campaign, the school’s resources have grown 75% since fiscal 2003, noted Moody’s analyst Karen Dulitz.

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