CHICAGO — The University of Cincinnati tomorrow will enter the market with $30 million of general receipts bond anticipation notes in one of the final debt sales of the school’s 17-year capital improvement campaign.

The notes are secured by a lien on the university’s general receipts, which totaled roughly $445 million during fiscal 2007. The general receipts include auxiliary fees, student fees and tuition, department sales revenue, and athletic and bookstore receipts. The university expects $458 million in general receipts revenue in fiscal 2008.

Roughly $27 million of the notes’ proceeds will be used to retire the remaining piece of $101 million of outstanding notes, said Lee Mairose, managing director of RBC Capital Markets, which is acting as underwriter on the transaction.

Peck, Shaffer & Williams LLP is bond counsel. Moody’s Investors Service assigns a MIG-1 rating to the upcoming note sale. Standard & Poor’s rates the notes SP-1-plus.

Last year the university sold eight bond and note issues for a total of $208 million of fixed- and variable-rate general receipts bonds and $134 million of notes. Altogether the school carries $1.24 billion of outstanding bonds, bond anticipation notes, and certificates of participation.

“The pace of issuance has greatly slowed down over the last year and a half,” Mairose said. “Basically the campus has been rebuilt over a 15-year period, and the project has been a success.”

Officials are considering entering the market in the next few months with $43 million of general receipts bonds, which would be used mostly to refund outstanding debt, Mairose said.

Since 1991, the university has spent more than $1.4 billion building new facilities and renovating existing ones on its Cincinnati campus, located two miles from the city’s downtown. The university is currently expanding and renovating the medical science building at an estimated total cost of $223 million. State funding would provide a significant chunk of that money.

Analysts have warned that the school carries a highly leveraged balance sheet, with thin liquidity and a high maximum annual debt service burden of 9%.

In December, Moody’s downgraded the university’s long-term rating to A2 from A1, citing in part negative unrestricted resources of $187 million in fiscal 2007, up more than $20 million from fiscal 2006.

The school has a plan to reduce its deficit, but its unrestricted financial resources are unlikely to grow significantly during the next few years as operations are expected to be slow to recover, Moody’s analyst Diane Viacava wrote in a recent report.

Standard & Poor’s has assigned a long-term A-plus rating with a negative outlook to the university’s general receipts bonds.

Credit strengths cited by analysts include steadily growing enrollment — which reached 29,500 in fiscal 2007 full-time equivalent students, with a growing net tuition of $8,794 per student — a number of new management policies to restore operating balance, and a planned 2008 fundraising campaign to help relieve debt issuance.

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