The University of Maryland expects to take bids for $144 million of revenue bonds on Tuesday with a portion of the deal pricing as Build America Bonds.
The auxiliary facility and tuition revenue bonds are rated Aa2 by Moody’s Investors Service, AA-plus by Standard & Poor’s and double-A by Fitch Ratings.
The bonds will be sold in three series. The $67.1 million of Series A bonds and $32.8 million of BABs will finance capital projects. The $44.8 million of Series C bonds will refund a portion of the university’s debt from 1997, 1999, 2000 and 2001. All of the revenue bonds are payable from student tuition and facility fees. The university had more than $1.2 billion in revenues pledged for debt service in fiscal 2008.
The system has $1 billion in pro-forma debt and a 1.5 times ratio of financial resources to debt. It had 107,712 full-time students enrolled in 11 campuses at the start of fall 2008. The system faces “continuing budgetary pressures” in the upcoming fiscal year with an uncertain impact on revenues, according to Moody’s. The system’s state funding, which was “modestly cut” in fiscal 2009, makes up 27% of appropriations.
Like other university endowments, Maryland’s investments have suffered in the economic recession. The endowment was down about 27% through the first nine months of fiscal 2009. Moody’s said Maryland has a “relatively high” proportion of its endowment in less-liquid, alternative investments. However, the system maintained over $1 billion in cash balances during the past year.
The system usually brings auxiliary facilities bonds competitively to the market in the summer, said Weems McFadden, executive accountant for the university system.
Abramoff, Neuberger and Linder LLP will serve as bond counsel. Public Financial Management Inc. will serve as financial adviser.