The governing body of Arizona’s public university system issued $382.9 million in bonds on behalf of Arizona State University (ASU).
The Arizona Board of Regents sold the bonds in three series. The tax-exempt Series 2024A bonds, consisting of $154 million, mature between 2025 and 2054, yielding between 2.87% and 4.22%. The tax-exempt Series 2024B bonds, consisting of $168.4 million, mature between 2025 and 2044, yielding between 2.87% and 3.88%. The taxable Series 2024C bonds, consisting of $60.5 million, mature between 2025 and 2045, yielding between 4.939% and 5.663%.
All of the tax-exempt bonds pay interest at 5%. The taxable bonds pay interest at the same rate that they yield.
The securities received a rating of Aa2 from Moody’s Investors Service and AA from S&P Global Ratings.
The rating incorporates ASU’s “excellent brand and strategic positioning that reflects sustained success and ongoing momentum for growth in enrollment, student charges and financial resources,” Moody’s analysts wrote.
ASU will use the bond proceeds to fund infrastructure projects, including several new buildings at its flagship Tempe campus. The primary project is a new academic building that will provide a centralized location for the university’s School of Social Transformation, which contains degree programs aimed at creating “social change that is democratic, inclusive and just,” according to its website.
The university will also use the proceeds to refund previously issued bonds.
The bonds are limited obligations of the board of regents, payable by ASU revenue.
Wells Fargo Bank, NA, served as lead underwriter on the issuance, purchasing the bonds for $417.4 million. The price reflected a premium of $35.3 million and a discount of $700,000. RBC Capital Markets, LLC acted as financial advisor.