Three series of revenue bonds totaling $2.65 billion were sold to finance projects in the UC system, announced California State Treasurer Fiona Ma on Friday.
A revenue bond is a type of bond used to fund projects, which can repay its investors with revenue gained from the project. In this case, the university issued three series of bonds: 2020 Series BE, which included tax-exempt bonds totaling $826.2 million; 2020 Series BF, which included taxable bonds totaling $323.3 million; and 2020 Series BG, which was another set of taxable bonds, this time totaling $1.5 billion.
The Series BE and BF bonds will be used to finance and refinance university projects and to refund other bonds. The Series BG bonds will be used as working capital, the amount of available capital for day-to-day operations, for the university, according to Mark DeSio, spokesperson for the state treasurer.
These bonds were sold to a group of underwriters, led by J.P. Morgan and Wells Fargo, who then sold off the bonds to investors. J.P. Morgan served as “left lead,” or managing underwriter, for the transaction, while Wells Fargo was involved in marketing the bonds to investors and coordinating the sale with the state treasurer, according to Doug Brown, managing director at Wells Fargo.
“Wells Fargo has worked with UC for many years and considers it an honor to be involved in a lead role on this transaction,” Brown said in an email. “The assignment reflects our commitment to the UC system and our efforts to provide bond financing ideas over an extended period of time.”
According to DeSio, a variety of investors, including retail and institutional accounts, purchased the bonds. Retail accounts include investment advisers, money managers and individuals, whereas institutional accounts include larger financial institutions such as insurance funds, bond funds, hedge funds and banks.
In California, the state treasurer is legally obligated to serve as the agent for sale on all state bond financings, according to DeSio. Under the Public Finance Division, the state treasurer handles the sale of revenue bonds.
Ma said in a press release that she is “proud” of the state’s commitment to higher education.
“The markets continue to align with our support for the capital finance needs of our world-class university system, which in turn prepares Californians with the skills required to compete in a knowledge-based economy,” Ma said in the press release.