Harvard of Haute Cuisine Borrows to Feed Trainee Chefs
The Culinary Institute of America, which Life Magazine called “the Harvard of Haute Cuisine,” wants investors in the $3.7 trillion municipal market to help expand a student center, kitchens and a dining hall in upstate New York.
CIA, based in Hyde Park, was founded in Connecticut in 1946 to train returning World War II veterans and offers bachelor’s degrees as well as courses for food enthusiasts, according to the school’s website. It plans to borrow $31 million through the Dormitory Authority of the State of New York tomorrow even as debt with similar ratings trails top-ranked securities by the most since 2008.
The deal is one of the $2.4 billion of long-term issues localities plan this week, down from $4.2 billion in the previous one, as the Labor Day holiday limits trading. Governments are borrowing with benchmark muni yields at about the highest level since April 2011 after individuals pulled $23 billion from local-debt mutual funds during the past 14 weeks, Lipper US Fund Flows data show.
Among the school’s graduates are author and television host Anthony Bourdain; Chipotle Mexican Grill Inc. (CMG) founder Steve Ells; and Grant Achatz, the James Beard Outstanding Chef award winner. The institute has seen enrollment rise by 3 percent since 2009 and about 2,900 students will take classes this academic year, according to deal documents.
“Due to growth, we need to expand our dining-hall space,” Charlie O’Mara, senior vice president of finance and administration, said by telephone. “We are attempting to provide expanded resources for student recreation.”
Proceeds will go toward a $26.1 million project to build a 33,000 square-foot (3,000 square-meter) addition, with three kitchens and a self-serve cafeteria that holds 450 people, O’Mara said. It replaces a 60-seat facility and is designed to serve students, he said. The borrowing also will help finish a $20.4 million hotel and conference center, he said.
The institute, which Life compared to Harvard University in 1979, has $101.4 million of long-term debt, according to bond documents. This week’s sale will be the last for at least two years, O’Mara said. The deal, which has a final maturity of 2043, will price tomorrow, he said.
Moody’s Investors Service ranked the debt Baa2, two steps above junk. It cited the school’s “prudent fiscal management” and its “healthy growth” in tuition. Still, it’s vulnerable to drops in enrollment because of reliance on such student charges, which account for 74 percent of total revenue in fiscal 2013, the company said.
BBB rated securities, the same rank as Baa2, have lost 9.3 percent this year through Aug. 29, compared with a 3.81 percent decline for top-rated bonds, according to Bank of America Merrill Lynch indexes.
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