California State Treasurer Fiona Ma announced that a total of $706.6 million in revenue bonds will fund capital projects chosen by the UC Board of Regents.
The sale consisted of two types of bonds: $586.5 million in 2023 Series BQ tax-exempt bonds and the remaining $120.1 million in 2023 Series BR taxable bonds, according to a press release from Ma’s office.
As public issuers, higher education and municipal issuers attain access to the tax-exempt bond market, which correlates to a lower interest rate — causing the majority of money to stem from said bond, said Meghan Gutekunst, interim associate vice president of the Capital Markets Finance department of the UC Office of the President, or UCOP.
The revenue bonds fund campus capital projects that “are identified by the locations that are then developed and presented to the regents,” said Ryan King, UCOP spokesperson.
“You probably look at the capital and financial strategies committee meetings, where they’re often reviewing different projects,” King said.
After price tags are placed on individual regent-approved projects and a cumulative threshold is reached, the bonds are approved to be issued.
“In order for us to issue bonds for a project, the regents have to approve the project and the financing for the project,” Gutekunst said. “(At) every regents meeting, once we kind of have enough projects that they have approved, then we essentially bundle them all together as issuing bonds for those projects.”
These bonds, headed by joint managers Siebert Williams Shank & Co. and RBC Capital Markets, will fund projects in student housing, university buildings and postponed maintenance, according to the press release.
In terms of timing, the bond transaction began in late May and will be officially closed in September.
Aside from the logistics behind the Board of Regents approval of projects, Gutekunst also spoke on the importance of planning.
“We’re always looking ahead and planning out and making sure that we have enough bonds for the projects that have been approved,” Gutekunst said.
Gutekunst deduced the transaction to be a three-to-four month process.
Gutekunst also commented on the regularity of the revenue bonds, noting that bonds are issued once or twice a year and are “a regular practice that the university does as part of its overall financing.”
The bonds received a double A rating which, according to Gutekunst, is a strong and expected rating that is in scale with the university.