The City of Houston Higher Education Finance Corporation sold $290.4 million in term bonds to finance campus improvements at a highly selective university in the city.
The bonds mature on May 15, 2034, and yield 2.64%. They pay interest at 5%. The securities received a rating of Aaa from Moody’s Investors Service and AAA from S&P Global Ratings.
The corporation will loan the bonds proceeds to Rice University, a private research university in Houston.
The rating reflects Rice’s “substantial wealth and exceptional liquidity,” as well as its “excellent competitive global market profile as a premier academic and research university,” Moody’s analysts wrote.
Rice has become increasingly selective in recent years. The university now boasts an admittance rate of 8%, down from 25% in 2005, according to the official statement accompanying the sale of the bonds.
With selectivity has come more tuition dollars per student. The university now charges $57,210 in annual tuition, according to its website, and it generated $273 million in net tuition and fees revenue last fiscal year. That marked an increase of more than $75 million, or 38%, from fiscal year 2019.
The bonds are special limited obligations of the corporation, payable by Rice revenue.
Jefferies LLC served as lead underwriter on the issuance, purchasing the bonds for almost $351 million. The price reflected a premium of $61 million.