University of Missouri System issues $332 million in bonds to finance facilities on four campuses
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University leverages strong credit rating, low interest rates, curator support to make priority investments
University of Missouri System officials today announced that the university has issued $332 million in bonds to finance more than a dozen facility projects on its campuses in Columbia, Kansas City, Rolla and St. Louis.
The projects, which include new construction ranging from residence halls to health care facilities, also involve upgrades to critical safety components at several facilities, including sprinkler systems and elevators, and enhancements for energy efficiency.
"I can't think of a better time for the university to explore new and creative funding mechanisms than now, and the Build America Bonds are an ideal fit for the university," said University of Missouri System President Gary Forsee. "Through the federal stimulus package, the university is able to use debt financing for revenue-generating facilities such as student housing and a new patient care tower. This affords the university the opportunity to reduce the debt service and represents a win-win for the university and those it serves."
The fixed-rate bonds will comprise $256.3 million in Build America Bonds and $75.76 million in tax-exempt bonds. Build America Bonds are taxable and provide a federal subsidy of 35 percent of the interest paid on the bonds created through the recent federal stimulus package. These bonds will provide the university with an opportunity to gain access to global investors looking to diversify their portfolios longer-term. The overall true interest cost of the bond issue is 3.843 percent.
"The university's backlog of facility needs continues to grow at an alarming rate," said UM system Vice President of Finance and Administration Nikki Krawitz. "But the good news is that the university is in a position to leverage its strong credit rating to take advantage of historically low interest rates."
Rating agencies Moody's and Standard & Poor's recently gave the university highly favorable credit ratings of AA2 with a stable outlook, and AA with a positive outlook, respectively.
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