DALLAS — The University of Colorado Board of Regents enjoyed a good market response Tuesday to a $95 million issue that included taxable and tax-exempt debt, said associate treasurer David Solin.
“We’re very pleased with the execution,” Solin said. “We believe that RBC and Stifel Nicolaus did a great job of marketing these for us.”
RBC Capital Markets was senior manager. Stifel Nicolaus & Co., Loop Capital Markets, and Wells Nelson & Associates were co-managers. BD Advisors LLC is the board’s financial adviser and Hogan Lovells LLP is bond counsel.
The deal was structured with four tranches. Series A-1 and A-2 were made up of $38 million of revenue bonds, with the $26.4 million of A-2 bonds being treated as taxable BABs, according to the preliminary official statement.
Series B was expected to be as much as $133 million of tax-exempt enterprise system refunding revenue bonds, but the university scaled that back to $56.8 million because of negative arbitrage on the escrow account, according to Solin.
The refunding brought net present-value savings of 4.25%, he said. The true interest cost for the entire issue came to 3.44%, he said.
The $4.5 million Series C was made up of qualified energy conservation bonds that qualify for federal subsidies.
The bonds carry ratings of AA-minus from Standard & Poor’s, AA-plus from Fitch Ratings, and Aa2 from Moody’s Investors Service.
The new money will be used to buy and renovate a 100,756-square-foot building in the East Campus Research Park in Boulder built in 1996 by Sybase Inc. for dry laboratory research.
Proceeds will also be used to expand the dental school, pay for improvements to the pharmacy school, and purchase the central utility plant at the Anschutz Medical Campus in Aurora.
The issue comes just two weeks before a Nov. 3 election that includes three ballot initiatives designed to severely restrict state and local debt issuance if passed.
The Series B enterprise system revenue bonds are secured by revenues from housing, dining, parking, rent of research facilities, and student fees.
The bonds are also secured by a pledge of 10% of tuition revenues as well as mandatory facilities construction fees.
The CU campuses include the flagship university in Boulder with more than 27,000 of the system’s 46,000 students. The Colorado Springs and Denver campuses serve commuting students.
The new Anschutz Medical Campus in Aurora is a growing medical research and treatment center occupying the former site of the Fitzsimons Army Hospital.