The Arizona Industrial Development Authority issued $280 million in bonds to finance a pool of loans to charter schools.
The bonds mature between 2027 and 2053, yielding between 3.2% and 4.57%. They received a rating of A from S&P Global Ratings.
“The school loans to qualifying school borrowers are for the purpose of financing or refinancing certain costs incurred by the public charter schools of the acquisition, construction, improvement, equipping and furnishing of certain public charter school facilities,” according to the official statement accompanying the sale of the bonds.
Charter schools have taken off in Arizona, the state where the highest percentage of public school school students attend charters. As of fall 2021, 20% of Arizona public school students attended charter schools, according to the National Center for Education Statistics.
This popularity has been accompanied by wider state support for charters compared to other states. Such support is often financed by bond issuances.
While supporters of Arizona charter schools argue that they deliver better student outcomes at lower public costs, critics contend that a lack of oversight makes them prone to financial irresponsibility and even failure. The Arizona Republic reports that 382 Arizona charter schools closed between 1994 and 2019, marking a 41% failure rate.
The bonds are special limited obligations of the authority, payable by certain loan revenues.
Siebert Williams Shank & Co served as lead underwriter on the issuance, purchasing the bonds for $298.3 million. The price reflected a premium of $19.5 million and a discount of $1.2 million. Lamont Financial Services Corporation acted as financial advisor.