The Dormitory Authority of the State of New York issued $242.2 million in bonds to finance upgrades at New York City’s public university system.
The bonds mature on July 1, 2028, and yield 2.62%. They pay interest at 5%. The securities received a rating of AA from S&P Global Ratings and AA from Fitch Ratings. The authority will loan the bond proceeds to the City University of New York (CUNY).
The rating “reflects the primary role played by the state in supporting debt service, the long history of state support of CUNY, and protective provisions for non-appropriation or insufficient funding,” Fitch analysts wrote.
CUNY includes 25 campuses in the New York City area and enrolls 230,000 students. A portion of the bond proceeds are expected to be spent on improvements at 17 of those campuses, according to the official statement accompanying the sale of the bonds.
The school describes itself as “a transformative engine of social mobility and scholarship that is a critical component of the lifeblood of New York City.”
The bonds are special obligations of the authority, payable by the City University Construction Fund, which receives appropriations from New York City and the state of New York.
Wells Fargo Bank, NA, served as lead underwriter on the issuance, purchasing the bonds for $262 million. The price reflected a premium of more than $20 million. Frasca & Associates, LLC acted as municipal advisor.