Idaho State University saves $3.2 million issuing tax-exempt bonds
July 13, 2012
Similar to a homeowner refinancing his or her housing loan, Idaho State University has refinanced some if its debt and has issued $27.5 million in Tax-Exempt, General Revenue Refunding Bonds in July, a move that will save the University millions of dollars.
"The Series 2012 Bonds, which were approved by the Idaho State Board of Education at its June meeting, will result in a net present value savings to the University of approximately $3.2 million," said James Fletcher, ISU vice president of finance. "The bonds were structured to ensure they added no new debt and did not extend the length or term of the existing debt."
The net proceeds from the Series 2012 Bonds will be used to refund and refinance certain outstanding bonds of the university. ISU timed the refinancing of the outstanding bonds to leverage the current low interest rates, which are the lowest that have been available in the last 40 years. This resulted in ISU receiving the lowest interest rate for any bond financing in the state of Idaho for fiscal year 2012.
ISU continues to pay down its debt, accrued due to the financing of projects such as the construction of the Rendezvous Complex.
As part of the bond process, Moody's Investors Service assigned Idaho State University a rating of "A1" with a "stable outlook," and Standard & Poor's affirmed ISU’s "A," rating, also with a "stable outlook."
In their reports, both agencies praised the University's overall solid financial profile and strong balance sheet.
"Moody's commented on ISU's strong leadership and governance initiatives, and commented about its expectation that the University will successfully manage stressful impacts of the economy, generate balanced operations and maintain its manageable debt burden," Fletcher said.
Standard and Poor's mentioned that ISU exhibits financial characteristics of a higher rating like the low debt ratio and steady operating performance.
"Idaho State University is pleased with the results of this initiative and the resultant savings and continues to seek ways to make education more affordable for Idaho’s students," Fletcher said.