The Harris County Cultural Education Facilities Finance Corporation issued $175 million in bonds to finance improvements at Baylor College of Medicine (BCM), the medical school affiliated with Baylor University.
The corporation sold the bonds in two series. The Series 2024A bonds mature on May 15, 2029, and yield 2.92%. The Series 2024B bonds mature on November 15, 2046, and pay interest at a floating weekly rate.
The corporation will lend the bond proceeds to BCM. The securities received a rating of A from S&P Global Ratings, which downgraded BCM’s outlook to stable from positive.
“The outlook revision to stable reflects potential balance sheet pressure as a portion of BCM’s expansion plans are funded with new debt from the series 2024A issuance and potentially other financial resources, in addition to philanthropy,” S&P analyst Phillip Pena said in a press release.
The Series 2024A bonds will help fund a new health sciences tower and the expansion of research and lab space; the projects will also be funded by philanthropic contributions. S&P said the bonds will “partly bridge timing” of those contributions. The Series 2024B bonds will refund securities the corporation issued on behalf of BCM in 2019.
Harris County is the most populous in Texas and includes the city of Houston, where BCM is located. BCM is part of Texas Medical Center, which includes more than 60 medical institutions and is the largest medical complex in the world, according to its website. The bonds are limited obligations of the corporation, payable by mortgage revenue.
Barclays Capital Inc and J.P. Morgan Securities LLC served as underwriters on the Series 2024A bonds. BofA Securities, Inc served as remarketing agent on the Series 2024B bonds. Kaufman, Hall & Associates, LLC acted as municipal advisor.