USM Maintains Favorable Debt Ratings, Completes $169 Million Bond Sale

Adelphi, Md. (Oct. 19, 2012) -- The University System of Maryland (USM) has successfully completed the sale of $169.005 million in USM Auxiliary Facility and Tuition Revenue Bonds comprised of two separate series. The sale was preceded by solidly high ratings from the three leading bond ratings houses.

For new construction projects, $115 million in Series C tax-exempt bonds were sold. Series D refunding debt bonds were sold for $54.005 million.

The True Interest Cost (TIC) to the USM for the sale of the $115 million in new bonds was 2.389 percent, representing the lowest borrowing cost for new projects since the System began issuing revenue bonds. The TIC reflects the actual cost of issuing a bond when accounting for the present value of money. The TIC for the $54.005 million in refunded bonds was 2.02 percent. The refunding of those bonds generated $5.3 million in net savings, representing 9.53% of the bonds' value.

A lower TIC represents a cost savings to the institution issuing a bond in interest owed to bondholders. Abramoff, Neuberger, and Linder, LLP served as bond counsel on the transaction. Public Financial Management, Inc., served as financial adviser.

All of the 2012 Series bonds received the high ratings of Aa1, AA+, and AA+ from, respectively, Moody's Investor Service, Standard & Poor's and Fitch Ratings. In the most recent Moody's survey, the USM is one of only 14 public universities with such high rankings, out of the 226 public universities with bond ratings.

"The University System of Maryland is indeed quite proud to continue to receive these strong ratings and finalize the sale of this latest bond issue in such a seamless manner," said USM Chancellor William E. "Brit" Kirwan. "The prudent and diligent management of our financial resources helps to drive our core missions in teaching and research."

Joseph Vivona, USM's vice chancellor of administration and finance and chief operating officer, praised the work of his staff and the USM bond counsel and financial adviser in bringing the successful bond offering to completion.

"Each year, the USM benefits from such strong ratings," Vivona said. "They allow the System to experience a lower cost of issuing debt in the future. These strong credit ratings also support our efforts in creating public-private partnerships for such construction needs as student housing and research buildings."

Contact: Mike Lurie
Phone: 301.445.2719
Email: mlurie@usmd.edu