UC bond sale restructures debt, saves more than $1B
The University of California announced on Sept. 30 that it has restructured $2.39 billion in debt through a series of bond sales, the largest such offering in higher education, to achieve a cash-flow savings of $100 million for each of the next 10 years and up to $21 million annually for the following seven years.
The taxable and tax-exempt bond sales — General Revenue Bonds 2013 Series AI, AJ, AK and AL — took place in New York City the week of Sept. 23 and are expected to close on Oct. 2.
The restructuring was authorized in connection with the approval of UC’s state budget for 2013–14 and previously had been expected to garner $80 million a year in savings over the next 10 years. The strong demand for the bonds, however, increased that savings to $100 million annually for 10 years, with an additional $17 million to $21 million for each of the following seven years.
“This bond restructuring accomplished two goals: Save taxpayer money over the life of the bonds and reduce financial stress on our operating budget in the coming years,” said Peter Taylor, UC’s chief financial officer. “We appreciate the support of our partners in the State Treasurer’s office and the Department of Finance, who worked with us so productively to accomplish this financing just months after legislative approval.”