SUNY Overhauls Dormitories With $527 Million of Debt: Muni Deals
The State University of New York, which houses more than 70,000 students, is selling $526.7 million in bonds to renovate its dormitories as debt from Empire State issuers beats the broader muni market.
Issued through the Dormitory Authority of the State of New York, the debt offered this week will be backed by revenue from SUNY’s residence-hall program, which totaled $477.6 million in fiscal 2012, according to deal documents. The bonds will first be offered to individual investors on Aug. 21, said David Ferrari, residence-hall program manager.
The university oversees 400 dormitories on 26 of its 29 campuses. About 200,000 students enrolled full-time last year. Moody’s Investors Service rates the bonds Aa3, fourth-highest, citing the “strong demand for student residential facilities.” The housing program had 95.8 percent occupancy in the fall semester last year, Moody’s said.
Investors “like the new credit,” Ferrari said by telephone from Albany, the state capital. “They think it will diversify their portfolio.”
The issue, which has a final maturity of 2042, will help pay for carpeting, electrical work, heating, air conditioning and Wi-Fi, Ferrari said. About 1,200 beds would be added, including 800 at the Stony Brook campus, about 60 miles (97 kilometers) east of New York City, he said.
A SUNY revenue bond maturing in 2028 traded Aug. 13 at an average yield of 4.76 percent, a spread of 2.81 percentage points over top-rated debt, according to data compiled by Bloomberg.
Bonds from New York issuers have lost 4.2 percent this year, compared with a 4.4 percent drop for the overall market, according to Standard & Poor’s indexes.
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