Students Seeking Bathrooms Drive UNC-Charlotte Sale: Muni Deals

College students insisting on amenities they have at home, such as individual bathrooms, are driving a $58.6 million bond deal this week from the University of North Carolina at Charlotte.

The institution, whose enrollment has grown by 66 percent since 2000 to 26,571, is selling the tax-exempt revenue bonds to build a new residence hall and renovate others, deal documents show. Moody’s Investors Service estimates the university will offer an additional $120 million in debt over the next two years for housing and other projects.

“Students demand the type of accommodations that they are leaving behind,” said Susan Brooks, associate vice chancellor for finance. “We need to build facilities to appeal to the largest number of people.”

The new dormitory will feature about 400 beds in suites as well as multi-purpose rooms, laundry facilities and a lounge , documents show. Bond proceeds would also pay for new plumbing and layouts to two other dorms.

“They would be more desirable accommodations,” Brooks said.

By August 2015, the university in the Tar Heel State would have 5,687 beds, a net increase of 135, even as some complexes would be unavailable that semester because of renovations, Brooks said.

Student Demand

The yield on the bonds, which have a final maturity of 2044, is expected to be about 4.15 percent, she said.

Moody’s grades the securities Aa3, its fourth-highest level of investment grade, saying the institution has “strong student demand.” The university has $468 million in debt outstanding, the company said.

A university revenue bond issued last year that matures in 2043 traded March 4 at an average yield of 4.3 percent and a risk premium of 0.51 percentage point, narrower than the average of 0.6 percentage point since January, data compiled by Bloomberg show.

The school, fourth-largest in the University of North Carolina system, was founded in 1946 to serve returning World War II veterans. Its men’s basketball team advanced to the Final Four in the National Collegiate Athletic Association tournament in 1977, its first year of participation, and the football team had its inaugural game in August.

UNC-Charlotte joins Puerto Rico and other localities offering $11 billion in deals this week, the most since the period ended Dec. 13 and twice as much as the $5.2 billion sold last week, data compiled by Bloomberg show.

Individuals added about $99 million to municipal-bond mutual funds in the week through March 5, Lipper US Fund Flows data show. It’s the fourth-straight week of inflows, although the figure is down from $247 million of additions in the prior period.

To contact the reporter on this story: Romy Varghese in Philadelphia at rvarghese8@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Schoifet, Alan Goldstein

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