USM Maintains Favorable Debt Ratings, Completes $153 Million Bond Sale

Adelphi, Md. (Oct. 14, 2011) -- The University System of Maryland (USM) has successfully completed the sale of $153.075 million in USM Auxiliary Facility and Tuition Revenue Bonds comprised of two distinct series. The sale was preceded by robustly high ratings from the three leading bond ratings houses.

To provide funds for new facilities construction and renovation projects, $115 million in 2011 Series A tax-exempt bonds were sold. 2011 Series B refunding debt bonds were sold for $38.075 million to lower interest costs on previous borrowings.

The True Interest Cost (TIC) to the USM was 3.471 percent for the 2011 Series A bonds. The TIC is a measure of financing cost that takes into account the actual cost of issuing a bond as well as the sale price premium bond purchasers were willing to pay for USM bonds.   A lower TIC represents a cost savings to the institution issuing a bond in interest owed to bondholders. TIC for the $38 million of 2011 Series B refunding bonds was 2.915 percent. Abramoff, Neuberger, and Linder, LLP served as bond counsel on the transaction. Public Financial Management, Inc., served as financial advisor.

The 2011 Series bonds received the high ratings of Aa1, AA+, and AA+ from, respectively, Moody's Investor Service, Standard & Poor's and Fitch Ratings.

"In these turbulent credit-market conditions, we are indeed quite proud to receive these strong ratings and complete the sale of another bond issue so efficiently," said USM Chancellor William E. "Brit" Kirwan. "The USM greatly values sound financial stewardship. Effective and careful management of our financial resources plays an important role in driving our core missions in teaching, learning, and research."

Joseph Vivona, USM's vice chancellor of administration and finance and chief operating officer, said the USM works diligently to continue its tradition of strong debt ratings in this challenging economic climate.

"The System benefits greatly from these strong ratings," Vivona said. "They allow the System to experience a lower cost of issuing debt in the future. Strong credit ratings also enhance the System's efforts in creating public-private partnerships for such construction needs as student housing, parking, and research buildings."

Contact: Mike Lurie
Phone: 301.445.2719