Hawaii’s Department of Budget and Finance sold $35.7 million in term bonds on behalf of the largest private university in the state.
The bonds mature between 2034 and 2043, yielding between 4.69% and 5.25%. They received a rating of BB from S&P Global Ratings.
The department will loan the bond proceeds to Hawaii Pacific University (HPU).
Unlike many U.S. universities, HPU’s enrollment continued to grow during the COVID-19 pandemic. Until 2023.
The issuance follows the first decline in headcount enrollment in the past five years, a modest drop from 4,876 students in 2022 to 4,774 last year, according to the official statement accompanying the sale of the bonds.
“The University believes the decline in undergraduate enrollment is primarily driven by a decline in international visiting students due to lower government subsidies in their home countries and [a] stronger U.S. dollar,” the bond documents read.
The strength of the dollar has been bolstered by interest rates kept high by the U.S. Federal Reserve. Central banks in other advanced economies have begun to drop rates, making their currencies comparatively cheaper. That means paying for U.S. universities, which usually take only dollars, is more expensive.
However, the drop in undergraduate enrollment was offset by an uptick in graduate enrollment. Almost twice as many graduate students attended HPU in 2023 as in 2019, reflecting the university’s recent addition of several masters programs.
HPU will use the bond proceeds to refund bonds the Hawaii Department of Budget and Finance sold on its behalf in 2013. The bonds are special limited obligations of the department, secured by loan repayments from HPU.
BofA Securities, Inc served as lead underwriter on the issuance, purchasing the bonds for close to par. Stifel, Nicolaus & Company, Inc acted as municipal advisor.