The Board of Trustees of the University of Illinois issued $68.3 million in bonds to refund a previous issuance.
The bonds mature between 2027 and 2042, yielding between 3.93% and 4.84%. They received a rating of A2 from Moody’s Investors Service and A- from S&P Global Ratings.
The rating “reflects the university’s excellent market strength, supported by its membership in the Big 10 Academic Alliance, flagship and land grant status, and large operating scope including significant healthcare operations,” Moody’s analysts wrote. The rating agency upgraded the university’s rating in April, citing an improvement in credit quality and “strengthened state support.”
The issuance comes amid an increase in state funding for higher education. The state’s budget for the upcoming fiscal year includes $2.53 billion for higher education. Funding for public universities is set to increase by $80.5 million, or by about 7%, from the prior fiscal year. The increase in total higher education spending—which reached $100 million, including the money for universities and $19.4 million for community colleges—was the highest in more than 20 years, Governor J.B. Pritzker said.
Proceeds from the issuance will refund healthcare bonds the university issued in 2013.
The University of Illinois enrolls almost 100,000 students across three campuses and generates about $7 billion in annual operating revenue. The bonds are special limited obligations of the university’s board, payable by revenue from the university’s health services system.
Morgan Stanley & Co LLC and Academy Securities, Inc served as underwriters on the issuance, purchasing the bonds for $71.4 million. The price reflected a premium of about $3 million.