Pennsylvania’s Lincoln University issued $29.2 million in bonds to refund existing debt.
The university sold the bonds in two series. The tax-exempt Series A bonds, consisting of $25.8 million, mature on July 1, 2044, and yield 5.9%. The federally taxable Series B bonds, consisting of $3.5 million, mature on July 1, 2028, and yield 8.003%. The securities received a rating of Baa3 from Moody’s Investors Service, which assigned a negative outlook.
“The affirmation of Lincoln University’s Baa3 issuer rating continues to reflect its regionally important role as a state-related historically black public university, while also acknowledging its very weak operating performance and thin liquidity,” Moody’s analysts wrote.
The issuance comes amid financial woes for Lincoln, the oldest historically black degree-granting university in the United States. The university’s liquidity has depleted in recent years, especially after federal pandemic aid ended in fiscal year 2023. The university had just $9.6 million in available resources at the end of FY23, compared to $15.2 million at the end of the prior fiscal year, according to the official statement accompanying the sale of the bonds.
“Improved net tuition revenue and increasing state appropriations will provide for better operating results in fiscal 2024, but expenses and revenue will remain misaligned,” according to Moody’s.
The bond proceeds will refund a term loan which the university used to refund securities it issued in 2013.
Lincoln University is a public university in Oxford, Pennsylvania, about 50 miles southwest of Philadelphia. The bonds are limited obligations of the university, payable by its revenue excluding gifts, grants, and donations.
Jefferies LLC served as lead underwriter on the issuance, purchasing the bonds for $27 million. The price reflected a discount of more than $2 million. PFM Financial Advisors LLC acted as financial advisor.