CSU bond rating unaffected by stadium

CSU's bond ratings were unaffected by the additional $220 million borrowed for construction of an on-campus stadium, university officials say.

Nor were the ratings negatively impacted by plans to borrow up to another $160 million for other projects, including a new medical center and biology building. Colorado State University issued and sold the stadium bonds Thursday, all at interest rates of less than 4 percent, CSU spokesman Kyle Henley said.

The low interest rates reflect the strong financial ratings the three-campus CSU system maintained with Moody's Investor Service and Standard and Poor's Rating Services. CSU has an "Aa3" rating with Moody's and an "A+" rating from Standard and Poor's, one step below the "Aa2" and "AA-" ratings the university receives from bonds sold through the state-intercept program with the backing of the state's general fund.

CSU did not use the state-intercept program for the stadium bonds, which included a combination of tax-exempt fixed- and variable-rate bonds and taxable fixed-rate bonds to be paid back over a 40-year period.

The Thursday bond sale totaled $239 million, Henley said — $220 million for construction of the stadium and $19 million to refinance some outstanding bonds at a lower interest rate.

"As CSU makes progress on its long-term strategy to complete significant campus infrastructure investments, the continuation of the system's investment-grade bond ratings indicate a real confidence in CSU leadership and the institution's financial health," Richard Schweigert, the CSU system's chief financial officer, said in a news release. "Given advantageous conditions in the bond market, these ratings will result in favorable interest rates as we finance a series of projects that are needed to support growth on the Fort Collins campus."

Schweigert and other university officials met with representatives of the ratings agencies as part of the process to reaffirm the bond ratings and financial outlook prior to the bond sale.

CSU plans to issue another $160 million in revenue bonds this summer to finance the building a new medical center at the corner of Propsect Road and College Avenue, a new biology building, a parking structure, a surface parking lot and the relocation of the Plant and Environmental Research Center that is being relocated to the south side of Prospect Road, along Centre Drive, to make way for the new stadium.

Groundbreaking on the stadium, which will be built on the southwest side of the main campus, between Pitkin and Lake Streets along the west side of a reconfigured Whitcomb Street, is scheduled for this summer. The 36,000-seat facility, with standing-room capacity of up to 40,000, is expected to be completed in time for the 2017 football season.

The latest sale puts the three-campus CSU system's total bonded debt and capital leases at a little more than $1 billion, which is roughly equivalent to the Fort Collins campus' annual budget.

Moody's also offered CSU a stable outlook for its "Aa3" rating based on an "expectation that the university will successfully manage the construction risk" of multiple projects and in anticipation that the university leadership will provide "sustained balanced operating performance."

Standard and Poor's warned of a potential ratings change on future bond sales if additional borrowing were to "exert greater pressure on financial resources."

"The investment-grade ratings from Moody's and S&P secured by the CSU system represent a positive external endorsement on the long-term financial strength of the university," Sanjay Ramchander, a finance professor and the associate dean of CSU's College of Business, said in the news release.

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