BRADENTON, Fla. — The Tennessee State School Bond Authority plans to competitively sell $245 million of tax-exempt and taxable higher education revenue bonds Wednesday.

Proceeds will be used by various universities to refinance commercial paper and provide new money to replace or renovate projects such as sports facilities, student wellness centers, housing, and laboratories.

The offering will include $226.9 million of Series A tax-exempt bonds and $18.13 million of Series B taxable bonds with serial maturities from 2011 to 2040.

The maturities are designed to match the life of assets being financed, said Mary-Margaret Collier, director of state and local finance.

The bonds are secured by higher education fees and charges pledged by the University of Tennessee Board of Trustees and the State University and Community College System Board of Regents.

If fees and charges are insufficient, a program is in place to intercept state appropriations to the universities to pay debt service.

Collier said she expects the bonds to be received well by investors, especially those seeking high-quality Tennessee paper, and by alumni seeking to support their universities with bond purchases.

"This is just a very strong credit," Collier said. "We expect very aggressive bids."

The bonds are rated AA-plus by Fitch Ratings, Aa1 by Moody's Investors Service, and AA by Standard & Poor's.

All three rating agencies placed a stable outlook on the bonds and affirmed the same ratings on $834 million of outstanding higher education bonds.

Analysts said Tennessee's higher education financing program is supported by a broad base of fees and charges at the participating universities along with the state's ability to intercept appropriations for debt-service payments, which has never been used.

There is "significant demand" for the higher education institutions, with more than 230,000 students enrolled in fall 2009 and prospects for ongoing growth, according to a report by Moody's analyst Dennis Gephardt.

Gephardt said the program has a manageable debt load and conservative debt structure.

Public Financial Management Inc. is financial adviser for Wednesday's sale. Hawkins Delafield & Wood LLP is bond counsel.

The School Bond Authority plans to be back in the bond market the week of Sept. 20 to sell $212 million of qualified school construction pool bonds for 15 primary and secondary public schools.

No other details were immediately available about the sale.

In the first round of QSCB issuance last year, the SBA sold $177 million of bonds for qualified construction programs to 13 local school districts. The loans are being repaid over 17 years at an interest rate of 1.515%.

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