The University recently became the nation’s first institution of higher education to use the Build America Bonds program for a benchmark public issuance, selling $250 million in bonds.
“There were a couple of schools who also issued Build America Bonds, but they did [it through] a private placement,” said Yoke San Reynolds, University Vice President and Chief Financial Officer. “We went right into the market.”
The money from the bonds will help fund upcoming construction projects on Grounds, which will cost around $800 million, University spokesperson Carol Wood said.
“The construction projects funded with these bonds create jobs and pump money into the economy, as intended by the American Recovery and Reinvestment Act of 2009,” Reynolds said.
Leonard Sandridge, executive vice president and chief operating officer, said he is very pleased with the results of the bond issue.
“Our staff is committed to preserving the fiscal integrity of the University’s operations,” Sandridge said, “and it is good to see that their hard work has been recognized by the marketplace as evidenced by the strong demand for our bonds.”
Sandridge also said the University Board of Visitors and teams working on the bonds provided the University with excellent advice about the issue. Reynolds noted that the new program required the University to take new risk factors into account.
“Using the Build America Bonds program required us to consider new risk factors that are not present in the traditional tax-exempt market in which U.Va. typically participates,” Reynolds said. “It required everyone on the bond team to stretch and be innovative.”
One possible risk factor is the potential for the repeal or changing of the American Recovery and Reinvestment Act, which partially subsidized the Build America Bonds.
In the end, though, University officials decided that the new bond program’s potential benefits outweighed any possible risk factors. Sandridge said he hopes the program will benefit the University community now and in the future.
“The combination of the University’s strong credit with the Build America Bond program means that our students and patients will experience lower costs and better facilities for many years,” Sandridge said.
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