CHICAGO - Board of Regents, State of Iowa take competitive bids Thursday on $27 million of revenue bonds to fund a new dormitory at the University of Iowa.
Springsted is financial advisor and Ahlers & Cooney is bond counsel. Ahead of the sale, Moody's Investors Service affirmed the Aa1 rating on $1.15 billion of rated debt.
Proceeds will finance construction of a new dormitory. The school has struggled to house students as its enrollment has shot up, according to local published reports.
The rating "reflects its national reputation as a flagship university of the state and member of the Big Ten athletic conference, as well as its research position and role as major health care provider for the state," Moody's wrote. It received $457 million of research grants in fiscal 2013. The credit also benefits from sound fiscal management and s diversified revenue base.
The university is conducting a capital campaign to bolster its fiscal resources. The university's current $1.8 billion cushion provides 1.55 times debt coverage. Another credit positive is state reimbursement for its $143 million academic building revenue bonds.
Its challenges include significant capital plans that include spending on recovery efforts from the June 2008 floods that hit the Iowa City region and damaged some university buildings, exposure to healthcare operations through its hospital, and weak in-state demographics.
The total price tag for the damage was $900 million. The school continues to work with federal authorities on reimbursement and anticipates the need to fund up to $150 million of expenses including $119 million of approved state funding for the academic revenue bonds.
The University of Iowa Hospitals and Clinics system accounts for a growing share of the university's operating revenues increasing the university's exposure to healthcare sector challenges. The figure stood at 49% in fiscal 2013.
"The stable outlook reflects expectation of continued growth in student, research, and other related revenues to support current and projected leverage," Moody's added. SUI had a record fall 2013 enrollment of 29,125 and its projected to grow at least 5% annually in the coming years.
