The University of Connecticut will go to market with a $90 million sale of Series 2012A refunding special obligation student fee revenue bonds.
Retail pricing is scheduled for Monday, with the institutional sale on Tuesday. Jefferies & Co. is lead manager. The school is conducting the sale in conjunction with state Treasurer Denise Nappier’s office.
Maturities for the fixed-rate bonds, proceeds of which UConn will use to refund Series 2002A bonds, will extend from 2013 to 2029. Closing will be around Dec. 13.
John Sullivan, the university’s manager of treasury services, expects the school to save more than $20 million in debt service. “It looks like the mid-twenties at this point,” he said Friday.
Overall, according to Moody’s Investors Service, the university has $1 billion of rated debt including general obligation bonds supported by a state debt service commitment.
Moody’s late Friday rated the special obligation bonds Aa2. Previously, Standard & Poor’s rated them AA-minus.
Moody’s said its rating “reflects the strong debt service coverage from pledged revenues, the university’s position as the state’s flagship and land grant university, substantial state funding for capital investment at its campuses and the university’s research activities that will benefit from the state’s investment in the bioscience initiative with the construction and opening of a new research institute operated by Jackson Laboratory.”
Offsetting factors, Moody’s added, include a modest balance sheet resource cushion relative to Aa2-rated institutions, vulnerability to federal cuts in sponsored research funding in the face of fierce competition for grant awards, indirect healthcare exposure through the University of Connecticut Health Center and stagnant to declining direct operation appropriations.
The sale will mark the sixth series of special obligation bonds issued under the UConn 2000 Infrastructure Improvement Program, designed for building improvements at its campuses, including the flagship in Storrs. Its last one was for $45 million in June 2010, at a true interest cost of 3.14%.
Other campuses are in Avery Point, Greater Hartford, Stamford, Torrington, and Waterbury. Total fall student enrollment is 30,256, according to the school.
Unlike the UConn 2000 general obligation debt service commitment bonds paid from the state’s general fund, these bonds are paid from certain pledged revenues of the university.
Under UConn 2000, 108 projects totaling $1.9 billion have been authorized, through October 2011.
Pullman & Comley LLC is bond counsel and the Law Offices of Joseph C. Reid PA is co-bond counsel.
Hawkins Delafield & Wood LLP and Lewis & Munday PC are representing the underwriters.
