UMass issues bonds to finance more campus construction, interest rates reflect confidence in management and efficiency steps
- The UMass System
BOSTON -- March 8, 2013: Having brought major academic and research facilities to all five campuses over the past decade, the University of Massachusetts this week sold $284 million in construction bonds to help finance a new phase of construction and renovation.
"We want to maintain the momentum that has been created in recent years and provide our students, faculty and staff with the facilities that will allow them to achieve at the highest levels," said University of Massachusetts President Robert L. Caret. "The University of Massachusetts this week was described as a world-class university, and we're taking the steps that will ensure that our facilities are also world-class." UMass placed 42nd in the world - and was the 10th highest-rated public university in the United States -- when the Times of London this week released its 2013 World Reputation Rankings.
Over the course of a two-day sale held Wednesday and Thursday of this week, the University of Massachusetts Building Authority sold $284 million in taxable and tax-exempt bonds to individual and institutional investors at an overall interest rate of 3.865 percent. The University sold $212.8 million in tax-exempt bonds at a rate of 3.834 percent and $71.7 million of taxable bonds at a rate of 3.976 percent.
"We are delighted to have been able to attract such favorable rates," said UMass Building Authority executive director Katherine P. Craven. "These rates will save the University millions of dollars in debt-service payments over the life of the bonds and reflect the confidence that investors have in the management and fiscal policies of our campuses and system."
The new construction bonds will help to finance vital projects on all five UMass campuses, including:
- Commonwealth Honors College academic/residence center at UMass Amherst
- UMass Boston's major roadway and infrastructure improvements
- UMass Dartmouth's bio-manufacturing accelerator project
- UMass Lowell's Emerging Technologies and Innovation Center
- UMass Medical School's purchase of three buildings in the biotechnology research park adjacent to the campus
In preparing their reports for investors, the three major credit-rating agencies all cited the University's sound management practices and emphasis on efficiency in awarding strong ratings.
Standard & Poor's, which awarded a AA- rating, noted that, "During the past year, the (UMass) system has rolled out a number of cost-saving initiatives including a focus on operational efficiencies and lowering the cost of education delivery."
Moody's, in awarding an Aa2 rating, noted: "The university remains committed to ongoing expense reductions including the Trustees efficiency and effectiveness task force and a focus on cost efficiencies related to purchasing, energy efficiency and information technology services."
Fitch, which awarded an AA rating, cited "the university's steady financial performance."
President Caret said the impressive credit ratings and strong demand for the UMass bonds was heartening and was "a testament to the hard work that has been occurring on all five campuses and to the oversight and involvement of our trustees."
President Caret added: "We are extremely pleased that the ratings agencies and investors have taken note of our focus on efficiency, effectiveness and accountability. At this time of soaring enrollment and as the Commonwealth of Massachusetts looks to us to be a catalyst for innovation and economic development, I look forward to accelerating our ambitious capital program on all five UMass campuses. Our building program will help our economy in the short term as a result of creating construction projects across the state and will yield long-term economic benefits by producing the people and ideas that will drive the Commonwealth's innovation economy."
All three ratings agencies noted the University's rapid enrollment growth as a sign of overall strength and Moody's cited President Caret's 50-50 state funding proposal as an initiative that could further strengthen the University's financial position.
Contact: Robert P. Connolly, 617-287-7073, Ann Scales, 617-287-4084