USM Maintains Favorable Debt Ratings, Completes $120 Million Bond Sale
Adelphi, Md. (March 29,
2010) - The University System of Maryland (USM) has successfully completed
the sale of $120 million in USM Auxiliary Facility and Tuition Revenue Bonds comprised
of two distinct series. The sale was preceded by very high ratings from the
three leading bond ratings houses.
The two series, 2010 Series A (Tax-Exempt Bonds) and 2010
Series B (Taxable Build America Bonds), were issued to fund new construction
projects. All of the 2010 Series bonds received the high ratings of Aa2, AA+,
and AA from Moody's Investor Service, Standard & Poor's and Fitch Ratings,
The True Interest Cost (TIC) to the USM was 3.157%, lowest
in USM history. The TIC reflects the actual cost of issuing a bond when
accounting for the present value of money. A lower TIC represents a cost
savings to the institution issuing a bond in interest owed bondholders.
According to Moody's Investor Service, USM's bond rating
reflected "positive operating margins and well-diversified revenue base" and
"its track record of positive operating performance... and maintaining a
continued focus on cost-containment measures."
Standard & Poor's ratings analysis reflected positively
on USM's "solid enrollment and demand" (148,676 in fall 2009, up 3.6% from the
previous academic year), "good revenue diversity," and "manageable debt
A report of the USM Auxiliary Facility and Tuition Revenue
Bonds Financial Advisory Memo, inclusive of the ratings reports, is included here.
"We are indeed proud to receive these strong ratings and
complete the sale of this bond issue so efficiently," said USM Chancellor
William E. "Brit" Kirwan. "The USM places a high value on sound fiscal
stewardship and its role in fueling teaching, learning, and research for the
Joseph Vivona, USM's vice chancellor of administration and
finance and chief operating officer, said the USM is pleased to continue
receiving such strong debt ratings, especially in this challenging economic
"These strong ratings offer two advantages. First, the
System experiences a lower cost of issuing future debt. Second, it helps foster
a more seamless partnership with the private sector as the USM explores future
public-private partnerships in the construction of student housing, research
buildings, and better parking," Vivona said.
Contact: Mike Lurie