The governing body of Central Michigan University (CMU) issued $52.6 million in bonds to refund previously issued securities.
The bonds mature between 2025 and 2039, yielding between 3.41% and 3.71%. They pay interest at 5%. The securities received a rating of A1 from Moody’s Investors Service and A+ from S&P Global Ratings.
The rating reflects the university’s “solid levels of wealth and liquidity, manageable debt levels and fiscal discipline,” Moody’s analysts wrote.
CMU will use the issuance proceeds to achieve debt service savings by refunding bonds that it sold in 2008 and 2014.
The issuance comes amid falling enrollment at the university. Enrollment has dropped more than 25% since 2019, falling to 14,423 students last year. That has weighed on the university’s finances. CMU recorded $404.8 million last year, compared to $439.4 million in 2019. A decrease in tuition revenue was responsible for most of the drop, and was slightly offset by an increase in revenue from the sales and services of educational activities.
CMU is a public university in Mount Pleasant, Michigan, aptly near the state’s geographic center. The bonds are limited obligations of the university’s board of trustees, payable by a pledge of unrestricted university revenue.
Barclays Capital Inc served as underwriter on the issuance, purchasing the bonds for $57.3 million. The price reflected a premium of almost $5 million. Blue Rose Capital Advisors, LLC acted as municipal advisor.