The Texas Tech University system sold $254 million in bonds to make improvements to its campuses.
The school issued the bonds in two series. The tax-exempt Series 2023A bonds, consisting of $198 million, mature between 2025 and 2040, yielding between 2.66% and 3.36%. The taxable Series 2023B bonds, consisting of $55 million, mature between 2024 and 2029, yielding between 4.642% and 5.28%. The securities received a rating of AA+ from Fitch Ratings, Aa1 from Moody’s Investors Service and AA+ from Kroll Bond Rating Agency.
The “rating is supported by the system’s solid regional enrollment base with stable to moderate growth, solid state operating and capital support, a track record of good adjusted cash flow margins through the pandemic, and robust balance sheet and leverage levels,” according to Fitch.
The bond issuance will finance a large planned expansion by Texas Tech. The university expects to invest more than $1.1 billion to add 1.5 million square feet to its campuses through 2024.
The Texas Tech University system includes five campuses: Texas Tech University, Angelo State University, Midwestern State University, Texas Tech University Health Sciences Center, and Texas Tech University Health Sciences Center El Paso. Planned projects include a $112 million academic sciences building at Texas Tech’s flagship campus in Lubbock, an $85 million medical sciences building at the El Paso Health Sciences Center, and a $32 million residence hall at Angelo State.
“These construction and renovation projects are transforming teaching classrooms, research laboratories and athletic facilities, among many other areas, all while furthering the mission of higher education and solidifying each university’s place as an epicenter in its community,” according to the university.
The bonds are special obligations of the university system, backed by its revenue.
J.P. Morgan Securities LLC served as lead underwriter on the issuance.