Debt Financing and Management
When economically feasible, the University considers defeasance or refunding of prior debt issuances to reduce borrowing costs. The total amount of defeased bonds outstanding at September 30, 2016 and 2015 was $161,473.000 and $43,212,000 respectively.
In July 2016 the University issued its tax exempt Series 2016A Bonds for a par amount of $89,975,000 and net premium of $15,667,458. The University also issued its taxable Series 2016B Bonds for a par amount of $11,285,000 less net discount of $157,421.30. These bonds were issued to refinance prior outstanding debt to achieve interest rate savings. These bond proceeds, $116,770,037 with an average coupon interest rate of 4.3 percent, were used to fully or partially advance refund the University's Series 2007A, Series 2008 and Series 2009A bonds aggregating $105,285,000 with an average coupon interest rate of 4.93 percent. The advance refunding resulted in an economic gain of $12,652,409 and total debt service payments decreased by $15,662,379.
In February 2015 the University issued its tax exempt Series 2015 Bonds for a par amount of $50,310,000 and net premium of $6,067,073. $10,077,770 of these bond proceeds were used to fund additional University projects and related issuance costs. The balance of the bond proceeds, $46,299,304, with an average coupon interest rate of 4.3 percent, were used to advance refund $42,170,000 in outstanding Series 2006 Bonds with an average coupon interest rate of 4.95 percent. The advance refunding resulted in an economic gain of $4,226,689 and total debt service payments decreased by $5,806,712.
On March 19, 2012, the University entered into a capital lease agreement for a medical office building. The lease period commenced on March 12, 2013 with an initial term of 25 years. The capital lease is included in long- term debt and the related asset is included in Buildings.
Long-term debt consists of the following as of September 30, 2016 and 2015 (in thousands):
|Long-term Debt||Interest Rates||Maturity||2016||2015|
|GRB & Refunding, Series 2016A||2.5% to 5.0%||11/15/2037||$89,975|
|Taxable GRB & Refunding, Series 2016B||1.5% to 4.0%||11/15/2037||$11,285|
|GRB & Refunding, Series 2015A||3.0% to 5.0%||11/15/2036||$50,070||$50,310|
|GRB, Series 2013A||3.0% to 5.0%||11/15/2044||$82,300||$83,670|
|GRB, Series 2009A||3.25% to 5.0%||11/15/2029||$65,555||$92,530|
|Taxable GRB, Series 2009B*||3.753% to 6.536%||11/15/2039||$26,940||$27,630|
|GRB, Series 2008||5.0% to 5.25%||11/15/2035||$93,000||$155,960|
|GRB, Series 2007A||4.0% to 5.0%||11/15/2037||$1,605||$26,275|
|Taxable GRB, Series 2007B||6.01%||11/15/2030||$4,220||$4,220|
|GRB, Series 2006||4.5% to 5.0%||11/15/2036||$1,205||$2,360|
|GRB, Series 2003B||5.02%||11/15/2018||$1,235||$1,610|
|Capital Lease Payable||3.8%||03/11//2038||$20,042||$20,610|
|Various notes payable||Various||2016 - 2020||$154|
|Gross long-term debt||$447,586||$465,175|
|Plus unamortized bond premium - Net||$31,817||$20,752|
|Total long-term debt||$479,403||$485,927|
GRB (General Revenue Bonds)
* Build America Bonds
Interest paid on long-term debt including the capital lease was $21,837,000 in 2016 and $21,818,000 in 2015.
On November 27, 2012, the University executed a $25.0 million line of credit facility with a financial institution with a borrowing interest rate of .25 percent in excess of the one-month LIBOR rate. This agreement has a three-year term with a maturity date of December 1, 2015. Effective, December 1, 2015, the University renewed and increased its line of credit facility to $35.0 million with a borrowing interest rate of .75 percent in excess of the one-month LIBOR rate. This agreement has a three-year term with a maturity date of December 1, 2018. As of September 30, 2016 and 2015, there were no borrowings outstanding under this facility.
The University's long-term debt rating is Aa3 (Moody's) and A+ (Standard & Poor's).
For additional information on long-term debt see Note 6 to the Financial Statements.