Nov. 11 (Bloomberg) -- Arizona State University, the state’s largest university, sold about $31 million of tax-exempt revenue bonds this week for construction projects.
The debt was issued through the Arizona Board of Regents, the governing body of the state’s three public universities. The proceeds will pay for renovations, computer laboratories and other projects, according to an official statement.
Standard & Poor’s rated the debt AA-, its fourth-highest ranking, while Moody’s Investors Service put it one step lower at A1. Bonds maturing in 10 years were priced to yield 3.18 percent. Similarly rated 10-year education bonds yielded 3.11 percent, according to data compiled by Bloomberg.
The sale provided an “opportunity to perform some important building renewal and infrastructure projects at a time when financing costs are low and construction costs are low,” Joanne Wamsley, the school’s senior associate vice president of finance, said in a telephone interview.
The bonds were sold under the state’s Stimulus Plan for Economic and Educational Development, or SPEED, program. The Legislature passed the initiative in 2008 to fund as much as $800 million of construction projects at the school as well as the University of Arizona and Northern Arizona University.
As much as 80 percent of the annual payments on SPEED bonds are funded by the state lottery, and the universities pay the rest, Wamsley said. In fiscal 2011, lottery revenue covered the full 80 percent of payments on such debt from the three schools, she said.
Arizona State sold its first SPEED bond in July 2010, which funded a similar set of projects, Wamsley said. The regents plan to issue almost $166 million in system revenue bonds by the end of March, according to the statement.
Arizona State has more than 72,000 students on four campuses in the Phoenix area, including almost 60,000 in suburban Tempe. At the start of the 2010-2011 academic year, the University of Arizona had about 39,000 students and Northern Arizona had an enrollment of more than 25,000.
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