The California State Public Works Board received a AA rating and stable outlook from Fitch Ratings ahead of plans to sell $75.4 million in bonds via negotiation on March 18.
Moody's Investors Service also gave the bonds an Aa2 rating, but has a negative outlook for the issuance and university's $17.8 billion in outstanding debt including the planned issuance.
Moody's analysts said the negative outlook reflects five years of operating deficits, a reduction in cash flow and unrestricted financial resources driven primarily by mounting pension and OPEB liabilities. Another concern is the capital plan that anticipates significant additional borrowing -- all combined with growing expenses and pressure on revenues, according to the report.
The bonds issued for the Regents of the University of California will be used to expand and update the Davidson Library at the UC Santa Barbara campus and to pay issuance costs.
The existing facilities consist of approximately 344,600 square feet in three contiguous structures constructed between 1954 and 1975, according to a Public Works Board report. Renovations will include seismic upgrades, mechanical and electrical upgrades, and interior renovations. A three-story addition of approximately 60,300 square feet will house special collections, an information commons, and flexible reader and study areas.
The total cost of the Davidson Library Project is approximately $76.2 million of which $71.4 million will be funded with the proceeds of the 2013C Bonds. Construction would run from June 2013 through January 2016.
Fitch also affirmed $2.39 billion of outstanding California State Public Works Board lease revenue bond debt issued for the UC Regents at AA with a stable outlook. The rating, one notch below UC's general revenue bond rating, reflects the university's strong credit profile and pledge of state legislative appropriations supporting the bonds, according to Fitch analysts.
The university's credit strengths include an exceptional reputation for academics, research and medical care that fuels consistently strong student demand, Fitch analysts said