Washington University in St. Louis, Missouri, braved volatile markets Thursday to price an upsized $450 million taxable combination refunding/new money deal.
With interest from 50 investors, the deal originally marketed at $300 million was bumped up to $450 million, said Sally Bednar, a managing director at Wells Fargo, co-senior on the deal with Morgan Stanley. Co-managers were Goldman Sachs, J.P. Morgan and Stifel.
"We originally announced the deal at $300 million to the market saying we would bring in the refunding if it made sense," said Amy Kweskin, the private university's chief financial officer.
The bonds were issued through the Missouri Health and Education Facilities Authority.
The taxable educational facilities revenue bonds received an Aa1 rating from Moody's Investors Service and AA-plus rating from S&P Global Ratings.
Ponder was the municipal advisor and GilmoreBell was bond counsel.
The deal finances and refinances capital costs for education and health facilities at the university that anticipated enrollment up to 16,273 for fiscal year 2019-20, according to the investor presentation. As of June 30, the endowment was valued at $8.1 billion making it the 16th largest among colleges and universities in the country, according to the presentation.
The university has $255 million in outstanding tax-exempt bond debt and $1.6 billion in outstanding taxable bond debt.
The university is constructing a $616 million 11-story, 610,000-square foot neuroscience research building, according to the investor presentation. It also recently completed a $360 million transformation to the east end of the campus. The university's School of Medicine is ranked fourth in National Institute of Health funding among medical schools nationally.
The finance team stayed "fluid and nimble" heading into the market with the deal, Bednar said. The university didn't need to come to market this week, or even the next, so it had the luxury of picking the optimal time, she said.
The finance team would not comment on present value savings, but said the deal extended the 2011 refunded debt out 10 years.
"Starting last Friday, we knew we would be in a position to come to market this week," Bednar said. "Each time an investor called, we said we were gathering information and didn't commit ourselves until (Wednesday night) to come to market."
The preliminary offering documents posted Monday, so the finance team began taking investor calls after that, Bednar said.
The volatility and questions about how COVID-19 closures were impacting the university resulted in more one-on-one calls with investors than is typical, said Bednar.
"Right now, we are very, very focused on making sure the rest of the semester goes well for the students," Kweskin said.
The university sent out notice to students March 11, while they were on spring break, that the university would be moving to online classes.
"At that point, our city and the state had not made changes," Kweskin said. "This was based on information we were receiving from the CDC."
The university, which is affiliated with Barnes-Jewish Hospital and St. Louis Children's Hospital, implemented measures that were based on its own crisis planning.
"I think we were more attuned to it, because we have a big program in China through our business school," Kweskin said. "Some of it came from having those relationships globally."
The county didn't issue stay-at-home orders until Monday.
"Much came from the CDC and alerts we were getting there," Kweskin said.
"And our crisis team and infectious disease doctors caused us to say, 'We need to really look at this and take proactive steps to protect the health of the entire community, not just the university,'" she said.
"There were a lot of questions about how coronavirus would impact this institution — and about how it would impact the university sector as a whole," she said.
