🔒UConn plans $581M bond sale to fund capital projects, refinance debt

The University of Connecticut is preparing to bring nearly $581 million in bonds and notes to market next week to fund campus construction projects and refinance older debt under its long-running UConn 2000 capital program. In a preliminary official statement dated March 2, the university outlined plans to issue $432.3 million of general obligation bonds and $148.5 million of taxable bond anticipation notes. The bonds are expected to be offered by negotiated sale the week of March 9. Most of the borrowing will finance capital improvements to various university facilities under the UConn 2000 Infrastructure Improvement Program, a multidecade initiative to modernize, rehabilitate and expand campuses statewide, including UConn Health. Proceeds from the new-money portion of the bonds and the notes will be deposited into the program’s construction account to fund Phase III projects. Part of the borrowing will be used to refinance some of UConn’s 2015 and 2016 general obligation bonds. The bonds are secured by UConn’s full faith and credit and are additionally backed by the state’s debt service commitment, which provides for annual payments from Connecticut’s General Fund to cover principal and interest. The securities, however, do not constitute a debt of the state. The UConn 2000 program, first authorized in 1995 and expanded multiple times by the General Assembly, has an estimated total cost of more than $5.6 billion. It is funded primarily through university general obligation bonds backed by the state commitment, along with special obligation bonds and other sources. As of the date of issuance, the university expects to have approximately $1.39 billion in outstanding general obligation bonds secured by the state commitment, excluding the new 2026 bonds and notes. Last week, Fitch Ratings assigned a ‘AA’ rating to the bonds and affirmed a stable outlook. Fitch said the rating reflects strong legal protections tied to the state’s debt service commitment and Connecticut’s wealthy and diverse economy, while noting the state continues to carry elevated long-term liabilities. The underwriting syndicate is led by RBC Capital Markets and J.P. Morgan.