DALLAS -- Texas A&M University System will price $210 million of top-rated bonds backed by the state’s Permanent University Fund in a competitive sale Wednesday.
Mary Williams, senior vice president at First Southwest Co., serves as financial advisor on Wednesday’s pricing. Williams is working with TAMUS treasurer Maria Robinson on the deal. Bracewell & Giuliani is bond counsel.
Jeffrey Timlin, partner and bond specialist at the Austin investment firm Sage Advisory Services, said the diminishing supply of new money municipal bonds in the fourth quarter should work in TAMUS’ favor.
“I’ve seen some definite interest in the new issue market,” Timlin said. “The bids have come in relatively strong. Most of intermediate and short maturities have been taken down pre-sale.”
The bonds will mature in series through 2033.
With TAMUS already rated triple-A, the bonds carry additional security with the backing of the PUF, a $15.2 billion endowment made up of state lands and investments for the universities of Texas and Texas A&M. Debt service on the bonds comes from an annual share of the earnings on the PUF.
With this sale, TAMUS will have $917 million of PUF bonds outstanding and $2.85 billion of debt, including bonds issued through the revenue finance system.
The system’s debt has doubled since 2008, according to Moody’s.
On Sept. 4, TAMUS priced $240 million of taxable revenue financing system bonds and $94.4 million of tax-exempt RFS bonds for expansion of its football stadium in College Station.
Those bonds were rated a notch lower at AA-plus by Standard & Poor’s and Fitch Ratings, with triple-A ratings from Moody’s.
The tax-exempt bonds maturing in 2028 with 5% coupons earned yields of 4.03%.
The expansion of the football stadium to more than 100,000 seats is considered the most expensive in college history at $450 million.
Proceeds of Wednesday’s deal will finance improvements on TAMUS’ 11-campus system but will not back any construction at the university’s new branch in Nazareth, Israel. The new Israeli campus, expected to cost $70 million, will be primarily funded by private donors, officials said.
Funding for the Israel campus, the first in that country from any American university, cannot come from state taxpayers, under the Texas constitution. Evangelical Christians led by Rev. John Hagee of San Antonio have played a leading role in creating the campus.
Texas Gov. Rick Perry, an A&M alumnus who frequently speaks in public about his Christianity, announced the new campus at an event with Israeli government leaders in Nazareth on Oct. 23.