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University of Texas Sells $800 Mln in Bonds

By Munichain News Desk

The governing body of the University of Texas issued $801.7 million in bonds to refund previously issued securities.

The bonds, sold by the school’s Board of Regents, mature between 2025 and 2054, yielding between 2.9% and 4.35%. They received a rating of Aaa from Moody’s Investors Service and AAA from S&P Global Ratings.

The rating reflects the university’s “exceptional strategic positioning derived from its strong brand recognition as one of the nation’s largest higher education systems,” Moody’s analysts wrote.

The issuance proceeds will refund commercial paper notes and bonds that the university system sold in 2007 and 2014. 

The University of Texas system includes nine schools and enrolls more than a quarter of a million students. It is anchored by the University of Texas at Austin, which enrolls 52,833 students, more than any other school in the system.

The issuance comes amid rising enrollment across the system. Enrollment has risen 6% from prepandemic levels, even as many schools across the United States—both public and private—have not yet recovered from pandemic-induced slumps. 

A sustained positive trend in enrollment has contributed to a rise in operating revenue. The university system recorded $21.5 billion in operating revenue last fiscal year, a 34% increase from fiscal year 2019, according to the official statement accompanying the sale of the bonds. That growth far exceeded inflation; overall prices increased by 20% during the same period, according to data from the U.S. Bureau of Labor Statistics.

The bonds are special obligations of the university’s board, secured by distributions from a state endowment fund.

J.P. Morgan Securities LLC served as lead underwriter on the issuance, purchasing the bonds with a premium of $89.2 million.

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