University of Hawai‘i completes sale of $100 million of University Revenue Bonds

University of Hawaiʻi
Howard Todo, (808) 956-8903
Vice President for Budget and Finance and CFO
Carolyn Tanaka, (808)956-8109
Associate Vice President for External Affairs and University Relations
Posted: Apr 6, 2009

The University of Hawaiʻi System successfully concluded the sale of $100 million of University Revenue Bonds, Series 2009A last week. The funds raised will be used for student housing and additional campus and research facilities and to refund $13.3 million of previously issued bonds at a savings of $1.3 million, or 9.7 percent of refunded par. The all-in true interest cost of the bonds was 5.18 percent, significantly lower than interest costs previously projected."By financing these projects with our own revenue streams, the university is moving with all deliberate speed to improve the quality of the facilities used by our students and faculty, and demonstrating in the process that we are part of the solution to Hawaiʻi‘s current economic challenges," said UH President David McClain.

The sale began on March 30 with a retail-only order period and concluded with an institutional order period on March 31. Retail demand for the university‘s bonds was strong both nationally and within the state, as the university generated more than $50 million of retail investor orders. The university received broad participation from institutional investors such as corporations, insurance companies and mutual funds on the balance of the bonds.

"I‘m extremely pleased with the excellent interest rate we achieved in selling the bonds, and I‘m thankful for the support and confidence in the university expressed by the individuals and institutions in Hawaiʻi and throughout the country in purchasing our bonds," said UH Vice President for Budget and Finance and CFO Howard Todo.

Moody‘s Investors Service and Standard & Poor‘s affirmed the university‘s outstanding ratings of "Aa3" and "A+". Fitch Ratings upgraded the university‘s revenue bonds to "AA-", citing the university‘s dominant market position within the state of Hawaiʻi, fairly consistent and significant levels of state financial support, healthy enrollment trends, sound balance sheet liquidity and low debt burden.

Funds raised by the sale of bonds will be used for the following projects:

  • UH Mānoa student housing renovations - $16.5M

  • Addition to the UH Mānoa Biomed Building - $22.5M

  • UH Hilo Bookstore Campus Center addition - $7M

  • UH West Oʻahu:
Kapolei campus development - $20M

  • Refund bonds issued in 1995 for the Kau‘iokahaloa Nui faculty housing project on the UH Mānoa campus - $13.3M

In addition, funds raised will be used for the acquisition and conversion of apartments for UH Hilo student housing, and for the acquisition of a facility for the Waianae Education Center administered by Leeward Community College.

Merrill Lynch & Co. underwrote the bonds, and a selling group of local Hawaiʻi brokers was used to maximize Hawaiʻi retail participation. Yields on the bonds ranged from 0.95 to 5.5 percent and carried a final maturity of October 1, 2038.