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Bond Financing Update September 25, 2007

Bond Financing Update September 25, 2007. Keys to Successful Bond Financings. Must have a prioritized list of projects tied to the strategic plan with a long term view – 10 years at least. Must be able to talk about projects on a strategic outcomes basis.

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Bond Financing Update September 25, 2007

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  1. Bond Financing Update September 25, 2007

  2. Keys to Successful Bond Financings • Must have a prioritized list of projects tied to the strategic plan with a long term view – 10 years at least. • Must be able to talk about projects on a strategic outcomes basis. • Must know what our programs, research, and student mix will look like over the long term horizon. • Must have the President and VP of Finance lead the rating agency presentation(s). • Must understand our financial ratios relative to financings.

  3. Needs and Opportunities ESCO Project: UI’s technical audit to identify potential energy savings resulted in a need to finance those projects. Refunding of Existing Bonds: Market conditions presented an opportunity to achieve substantial savings on existing debt.

  4. Planning Process • Development of a 30 Financing Proforma: • Modeling of Repayment Capacity • Conservative Student Enrollment Assumptions • Identification of Revenue Sources • Review of Financing Methods: • Bank Loans • Lease Purchase/Certificates of Participation • Bonds • Assessment of Financing Needs • Assembling the Team

  5. Bond Team • Consultants: • Lee White, George K. Baum & Co - Investment Banker • Richard Skinner, Skinner Fawcett – Bond Counsel • Blake Wade, Ballard Spahr – Bond Counsel • UI Team Members: • Tyrone Brooks, Admin. Operations – Financing Strategies • Jana Stotler, Strategic Budget & Controller – Financing Strategies • Kent Nelson, General Counsel – Legal Counsel • Ron Town, Business Srvcs & Accounting Srvcs – Debt Accounting • Theresa James, General Accounting – Debt Accounting • Trina Mahoney, Budget Office – Capital Budgeting

  6. How We Progressed • February ‘07 • Presentation on financing potential to meet UI’s needs to VP of Finance & Admin. • Beginning review of potential projects for bonding • March ’07 • Presentation to President on potential of bond financing • April ‘07 • Presentation to Board of Regents on future financing plans • June ‘07 • Bond team assembled & began pre-issuance work • August ‘07 • Capital projects for bond financing approved by President • Rating agency presentation at UI • Bond Series 2007 materials assembled • September ‘07 • Agenda item submitted for Issuance of Series 2007 Bonds to Board of Regents for October meeting.

  7. Financing Philosophy Development of long-range financing strategies to assist UI’s campus renewal and strategic plan. 30 Year Strategy Strategic and prudent use of bonds

  8. Phase I Details • Estimated Timeline and Amounts: • Bond Refunding: $65 M – October 2007 • ESCO Project: $35 M – October 2007 • Series 2008: $34 M – December 2008 • Series 2010: $45 M – December 2010

  9. Credit Rating Comparisons

  10. What the Rating Agencies Said • Moody’s • A1 Rating with Stable Outlook • “…outlook for UI reflects its fundamental market and operational strengths despite its high leverage and modest enrollment declines. Stabilization of enrollment and continued balanced operational performance are important to maintaining a stable credit profile as the University adds additional debt in coming years.” • “What could change the rating – UP…dramatic increase in financial resources…stabilization of enrollment levels and continued debt service coverage would improve the University’s credit strength.” • “What could change the rating – DOWN Continued enrollment declines; deterioration of balance sheet…greater borrowing than currently anticipated.”

  11. What the Rating Agencies Said, Con’t • Standard & Poor’s • A+ Rating with Stable Outlook • “…outlook anticipates stabilized demand and improved fundraising It also reflects continued state financial support…further efforts to achieve balanced financial operations…future debt will be matched with additional financial resources.”

  12. Moving Forward • Continue implementation of strategic plan • Exhibit consistent and strategic enrollment growth • Prudent operational performance and resource stewardship • Allocation of funds specifically to the top strategic priorities • Stable growth in resources with an emphasis on academic operations, research enterprise, and donor giving

  13. Questions?

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