Higher education bonds

The Dormitory Authority of the State of New York today plans to competitively price $800 million of taxable personal income tax Build America Bonds.

The Dormitory Authority of the State of New York approved $2.31 billion of personal income tax bonds at a special board meeting in Albany yesterday.

WASHINGTON — The Internal Revenue Service has closed its audit of $161.3 million of variable-rate demand student housing revenue bonds issued by the Payne County, Okla., Economic Development Authority in 2002 with no change to the tax-exempt status of the debt.

A position the Internal Revenue Service is taking regarding $150 million of student-loan revenue bonds under audit could have ramifications for the entire tax-exempt student loan bond industry, market participants said last week.

The Dormitory Authority of the State of New York last week revised a previously approved financing because staff expected that credit rating recalibrations obviated the need for mortgage insurance.

Bonds backed by federally guaranteed student loans are subject to greater short-term basis risk because of a mismatch in the way the interest rate on the bonds is calculated compared to the way the Department of Education sets interest on the underlying loans that flow into bond trusts, according to a report released by Fitch Ratings yesterday.

WASHINGTON — Goldman, Sachs & Co. has hired Christopher J. Cowen as managing director and co-head of higher education in its public sector and infrastructure banking business.

BRADENTON, Fla. — The federal judge presiding over the Alabama ­Public School and College Authority’s case that attempts to void a swaption with ­JPMorgan has agreed with a joint request to delay the trial more than four months.

CHICAGO — The University of ­Chicago is watching the market closely, hoping to sell $300 million of taxable fixed-rate bonds this week or next to raise funds for capital projects and restructure debt from a bank line of credit.

The University of Connecticut plans to market tax-exempt bonds to institutional investors tomorrow in a $138.8 million offering that began a two-day retail order period on Friday.

The Internal Revenue Service has found that the vast majority of colleges and universities have endowment funds invested in a wide range of securities.

The Indiana Finance Authority Wednesday will sell $20 million of tax-exempt revenue bonds on behalf of the National College Athletic Association.

WASHINGTON — Congress could save billions of dollars by prohibiting tax-exempt colleges and universities from earning arbitrage indirectly through endowments that are invested at higher interest rates than what they are paying on their tax-exempt bonds, the Congressional Budget Office concluded in a report.

Michigan State University today will price $229 million of general revenue bonds to refund outstanding variable-rate debt and commercial paper and pay termination fees related to interest rate swaps.

CHICAGO — While Illinois is still behind in aid payments to its public universities, the rating risk posed by the state’s liquidity problems eased a bit yesterday when Moody’s Investors Service confirmed the ratings of seven of eight public schools and took them off negative watch.

CHICAGO — Michigan State University on Thursday will price $205 million of 40-year taxable Build America Bonds for capital projects. The school in May expects to offer a pair of refunding transactions that will restructure some of its variable-rate demand bonds and refund outstanding commercial paper.

Oklahoma Gov. Brad Henry has signed a bill that authorizes the restructuring of a 2006 bond issue providing matching funds for endowed chairs at state colleges and universities. The state had planned to issue another $100 million in 2009, but debt service on the new bonds was not appropriated by the Legislature.

New Jersey Gov. Chris Christie’s budget philosophy is for the state and local governments to operate more efficiently with less revenue rather than increasing taxes or fees.

Standard & Poor’s placed Peralta Community College District’s general obligation ratings on negative CreditWatch because the school failed to adopt a budget for fiscal 2010.

The North Carolina State University at Raleigh expects to issue $77.5 million of tax-exempt and Build America Bonds on Tuesday.