A Texas nonprofit sold $56 million in bonds on behalf of Southern Methodist University (SMU) to refund a previous issuance.
The bonds, issued by the Southwest Texas Higher Education Authority, mature between 2029 and 2042, yielding between 3.7% and 4.52%. The securities received a rating of AA- from S&P Global Ratings and Aa3 from Moody’s Investors Service.
The authority will loan the bond proceeds to SMU.
The rating reflects the university’s “strong financial reserve coverage of expenses and total adjusted debt and excellent strategic positioning as evidenced by healthy fundraising and steady overall enrollment, bolstered by national brand recognition and a growing, diverse economy in the Dallas-Fort Worth area,” Moody’s analysts wrote.
The issuance follows the university’s launch of a $1.5 billion fundraising campaign in 2021. The program is focused on increasing scholarship opportunities, funding research, and improving campus infrastructure. In August, the university received a $30 million donation from the O’Donnell Foundation, a Dallas philanthropy.
The bond proceeds will refund securities issued in 2013.
The Southwest Texas Higher Education Authority has issued bonds on behalf of SMU for forty years. SMU enrolls almost 12,000 students, almost all of whom study at its University Park campus. The bonds are limited obligations of the authority, payable by the loan from SMU. The university has $376 million in debt outstanding.
BofA Securities Inc served as lead underwriter on the issuance, purchasing the bonds for close to par.