The governing body of Northern Arizona University (NAU) issued $26.4 million in certificates of participation to refund previously issued securities.
The certificates, sold by the Arizona Board of Regents, mature between 2024 and 2030, yielding between 3.13% and 3.7%. They pay interest at 5%. The securities received an insured rating of A1 from Moody’s Investors Service and AA from S&P Global Ratings, and an underlying rating of A2 from Moody’s and A from S&P.
The rating “reflects the university’s established brand and strategic position as a large comprehensive university in northern Arizona,” Moody’s analysts wrote.
The university will use the issuance proceeds to refund certificates that it sold in 2013 and 2015.
The Arizona Board of Regents governs the state’s three public universities, including Arizona State University and the University of Arizona in addition to NAU, which is based in Flagstaff. NAU is the smallest of the three universities, but it still enrolls more than 28,000 students, according to the official statement accompanying the sale of the bonds.
Last December, the board enacted a remediation plan to respond to a brewing financial pickle at the University of Arizona. The school had spent too much money, and its reporting structure had not alerted the board of the problem. The new plan, which applies to all three universities, calls for expanded controls on spending as well as an enhanced reporting system.
The certificates are limited obligations of the board of regents, secured by lease payments on properties Northern Arizona University leases to businesses.
Stifel, Nicolaus & Company, Inc served as lead underwriter on the issuance, purchasing the bonds for $27.9 million. The price reflected a premium of $1.5 million. RBC Capital Markets, LLC acted as financial advisor.