The Monroe County Industrial Development Corporation sold $397.6 million in bonds to finance improvements at the University of Rochester’s Medical Center and other campus upgrades.
The corporation sold the bonds in two series. The tax-exempt Series 2023A bonds, consisting of $296.9 million, mature between 2034 and 2053, yielding between 2.86% and 4.16%. The taxable Series 2023B bonds, consisting of $100.8 million, mature on July 1, 2033, and yield 5.13%. The securities received a rating of Aa3 from Moody’s Investors Service and AA- from S&P Global Ratings.
“The Aa3 issuer rating reflects the university’s excellent brand and strategic positioning as a large private research university with a sound student market and a leading healthcare system serving the upstate New York region,” Moody’s analysts wrote.
The issuance comes as patient care becomes an increasingly large portion of university revenue.
The Series 2023A bonds will finance the expansion of the medical center’s emergency department, including a new, nine-story inpatient tower. The Series 2023B bonds will fund general improvements across all of the University of Rochester’s five campuses.
Moody’s analysts noted that a new orthopedic center, the emergency department expansion, and the tower present a “significant revenue opportunity as the medical center seeks to build out its capacity and increase operating margins.”
The bonds are special and limited obligations of the corporation, payable by university revenue. The university generated more than $6 billion in operating revenue in fiscal year 2023, and had almost $2 billion in debt outstanding as of June 30.
Barclays Capital Inc served as lead underwriter on the issuance, purchasing the bonds for more than $432 million. The price reflected a premium of more than $35 million. PFM Financial Advisors LLC acted as financial advisor.