Officials representing the University on April 16 closed on a $144.9 million bond sale for UConn 2000 projects in one of the most successful sales yet of UConn 2000 bonds.
The sale was so successful, says John Sullivan, UConn’s manager of treasury services, that the sales window was shortened from three days to two, and University officials, working with the State Treasurer’s office, were able to negotiate down the interest rate the state will have to pay buyers to 4.01 percent – one of the lowest rates in the history of the program.
Including original issue premiums, the bond sale will support $150 million in UConn 2000 projects.
“Investors are confident in the University’s management, the enrollment growth, and the state’s commitment to the University and the renewal of our campuses’ infrastructure,” Sullivan says.
Denise Nappier, the State Treasurer, adds, “The tremendous success of the sale demonstrates investor confidence in both the bonds as an investment and in the University as an institution.”
UConn will begin spending the money almost immediately, says Sullivan.
The proceeds will be used for a range of projects, including new construction to replace the Arjona/Monteith buildings, residential life projects, a research tower at the UConn Health Center, deferred maintenance, library collections, telecommunications upgrades, and renovations at most of the regional campuses.
The bonds were purchased primarily by retail, or individual, investors, says Sullivan.
“We’ve had tremendous retail demand – I mean tremendous,” Sullivan said. “This is rather a large bond issue for us, but we weren’t in the market last year so I think there’s a lot of pent-up demand for UConn bonds.”
In the end, about 75 percent of the bonds were sold to individual investors, many of them from Connecticut, one of the highest proportions since the UConn 2000 program began in 1996.
Sullivan says retail investors are preferred because they tend to buy and hold the bonds, rather than trading them, as is likely when financial institutions purchase them.
This tends to make the secondary supply of bonds scarce, which helps drive demand for new bond issues when they come to market and assists the University in obtaining favorable financing terms in the future.