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University of Illinois Sells $165 Mln in Bonds

By Munichain News Desk

The governing body of the University of Illinois issued $164.6 million in bonds to finance the expansion and renovation of its basketball arena and refund previously issued securities.

The university’s board of trustees sold $141.9 million in tax-exempt bonds and $22.7 million in taxable bonds. The tax-exempt bonds mature between 2025 and 2044, yielding between 2.93% and 3.78%. The taxable bonds also mature between 2025 and 2044, yielding between 4.944% and 5.61%. The securities received a rating of Aa2 from Moody’s Investors Service and AA- from S&P Global Ratings.

The rating “reflects the university’s excellent market strength,” Moody’s analysts wrote. They cited the school’s membership in the Big Ten Academic Alliance, which is the academic consortium of schools in the Big Ten athletic conference, as well as its flagship and land grant status and its “large operating scope including significant healthcare operations.”

The university will use the bond proceeds to finance and refinance the school’s expenditures for the $40 million renovation of its basketball arena. The expansion will more than double the arena’s square footage to include additional athletics and study spaces, according to the university’s athletic department.

The University of Illinois has a storied basketball program, and its basketball teams have long been a focus of university spending. The school’s men’s team has the highest-winning percentage all-time of any team in the Big Ten (excluding the University of California, Los Angeles, which is joining the Big Ten next year after spending almost a century in the Pac-12), yet it has never won the NCAA national championship. 

The school will also use the issuance proceeds to refund bonds that it sold in 2014.

The University of Illinois is the largest university in the state. It includes three campuses, with a flagship campus in Urbana-Champaign and additional locations in Chicago and the state capital of Springfield. It also operates a major hospital system, which recorded $1.2 billion in operating revenue last fiscal year, according to Moody’s.

The bonds are special, limited obligations of the university’s board of trustees, payable by the net revenue of its health services system and by some medical school revenue, including tuition. 

BofA Securities, Inc served as lead underwriter on the issuance, purchasing the bonds for $182.3 million. The price reflected a premium of about $18 million. PFM Financial Advisors LLC acted as municipal advisor.

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