The California State University (CSU) system sold $906 million in bonds to develop new facilities at its member schools.
The system sold the bonds in two series and a remarketing supplement. The Series 2023A bonds, consisting of $344 million, mature between 2024 and 2053, yielding between 2.41% and 3.69%. The taxable Series 2023B bonds, consisting of $462.6 million, also mature between 2024 and 2053, yielding between 4.594% and 5.21%. The system remarketed $100 million worth of Series 2016B-3 bonds, which are expected to have a mandatory tender in 2026. The securities received a rating of Aa2 from Moody’s Investors Service and AA- from S&P Global Ratings.
The rating “reflects CSU’s excellent brand and strategic positioning as the nation’s single largest four-year higher education system by enrollment with strong demand and significant scale,” according to Moody’s.
The Series 2023 bonds will fund improvements at three of CSU’s campuses: San Francisco State University, San Diego State University, California State University, Sacramento, and California State University Northridge. Most of the improvements will take place at San Francisco State University, where the bonds will finance a science building and a “green” housing complex, student health center, and dining facility. The bonds will finance housing at the other three universities.
CSU includes 23 campuses and seven off-campus centers, collectively enrolling over 450,000 students.
The bonds will be backed by revenue from the university system. Last fiscal year, CSU generated $13.2 billion in operating revenue, according to Moody’s.
Barclays Capital Inc served as lead underwriter on the issuance.