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2019 Bond Issuance Update

2019 Bond Issuance Update. Conversation with the President Mark P. Haas Vice President for Finance and Treasurer February 28, 2019.

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2019 Bond Issuance Update

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  1. 2019 Bond Issuance Update Conversation with the PresidentMark P. HaasVice President for Finance and TreasurerFebruary 28, 2019 \\evpas.campusad.msu.edu\public\Staff - Individual Folders\Haas, Mark\Presentations\Conversations_LEAD\02_28_19_Conversation with the President mph 02 25 2019.pptx

  2. 300 Finance Team Members Manage • 330,785 student account bills for nearly $1 billion annually • $2.6 billion banking operation • $1.9 billion operating cash flow • $1.7 billion debt portfolio • 843,000 financial transactions, audited financial statement • 3,903 endowments (scholarships) valued at $1.4 billion • 4,321 research awards valued at $695 million, 36 compliance audits • Insurance for all aspects of MSU, 2,194 claims/consultations • $1.2 billion in purchases; 184,808 deliveries to campus • $5 billion retirement program oversight

  3. LawsuitSettlementPaymentandConstructionBonds • Issued $500 million short-term bonds on December 4, 2018, to make lawsuit settlement payment within 10 days of judicial approval • Issued $300 million long-term bonds in February to refinance part of December lawsuit bond, locking in interest rate and spread payments over 30 years • Also, issued $350 million of long-term bonds to fund construction in February

  4. 2019 Bond Issue Summary • Largest MSU bond issuance ever - $650 million • Five Investment Banks: Citi, BAML, RBC, JPM, MS • Market and investor uncertainties required investor presentations and multiple investor calls • Pricing strategies increased potential buyer pool • Strong demand for MSU bonds due to pricing strategy, financial strength, and transparency with rating agencies and investors • Taxable bonds with 10 year par call to allow future refunding at lower cost increased marketing challenge

  5. 2019 Bond Issue Details *Replaces part of December private placement, short-term lawsuit settlement funding and provides $22 million new construction funding

  6. How Will 2019 Bond Debt Service Be Paid? • Series 2019 A bond debt service will be paid from operating cash investment earnings • Series 2019 B bond debt service will be paid from a combination of General Fund, Departmental Funds and operating cash investment earnings

  7. Strategy: Invest Cash - Use Debt for Capital Projects

  8. InvestingOperatingCashNetted$342MillionPast10Years

  9. MSU Debt and Future Debt Capacity

  10. Financial and Insurance Strategy • Hope for the best but plan for the worst • Financial planning (cash flows and budgeting) assume no insurance proceeds for lawsuit costs • All insurance proceeds will be used to pay down lawsuit-related debt • Any insurance proceeds will free up annual funds earmarked for debt service to support university missions of education, research and outreach

  11. Questions?

  12. New MSU Travel @ State Solution Update • MSU began implementing Concur Travel & Expense in June 2018 • User-friendly, fully-electronic from authorization to reimbursement • Campus-wide travel advisory committee helped guide the process • Over 480 attended a sneak peek on February 6 • System Go-Live in April • Pilot launch with two colleges in April • Phased roll-out to campus beginning in May • All units expected to be fully using system by October • More information on MSU web site “Travel @ State Project”

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