The University of Texas system issued almost $338 million in bonds to refund a previous issuance.
The bonds mature between 2031 and 2043, with yields ranging from 2.73% to 3.58%. The securities received a rating of AAA from Fitch Ratings and Aaa from Moody’s Investors Service.
The system’s “overall revenue stability benefits from a solid enrollment niche, diverse multi-facility healthcare operations, strong fundraising, a deep research base, historically stable state operating support and substantial endowment income,” according to Fitch.
The issuance comes amid increasing enrollment at schools in the University of Texas system, which includes the University of Texas at Austin (UT Austin) and thirteen other state-supported institutions. Enrollment for the system was 243,000 in 2022, compared to 213,000 a decade prior. More students attended UT Austin than any of the system’s other schools.
The bonds will be backed by revenue from the university system, which generated almost $20 billion last year. Most of that revenue was driven by net sales and services of the system’s hospitals.
The issuance will add to the outstanding debt of the system, which owes $600 million in 2023. That amounts to about 3% of its annual revenue.
Jefferies LLC served as lead underwriter on the issuance, purchasing the bonds for $389 million. The price reflected a premium of $52 million.