Featured Municipal Bond Issue, Week of 09/05/2017: Board of Regents of the University of Texas System Revenue Financing System Bonds – $350 Million
This week’s featured bond comes from the State of Texas. The Board of Regents of the University of Texas System is issuing revenue financing system bonds in the amount of $350 million the week of September 05, 2017. These University of Texas revenue bonds are being issued as a single, taxable series, and are to be used to refund a portion of the Board’s Revenue Financing System Taxable Commercial Paper Notes.
Security for the bonds is a lien on a pledge of Pledged Revenues of the Revenue Financing System. The Master Resolution provides that the obligation of the Board to pay is absolute, irrevocable, complete, and unconditional, and that the amount, manner, and time of payment shall not be modified in any way regardless of any contingency. Pledged Revenues are fees and tuition from each student enrolled at each member sufficient to meet financial obligations, except students who are exempt by law from paying such tuition and fees. The bonds are not obligations as described in section 103(a) of the U.S. Code. Accordingly, stated interest and issue discount, if any, are considered part of ‘gross income’ of bond owners, and subject to federal income taxation when received or accrued.
Further details on the purposes, tax-status, and security, as well as other matters pertaining to these University of Texas Board of Regents revenue bonds can be found in the preliminary official statement, provided by MuniOS.
Although the University of Texas at Austin is the largest and most well-known campus, it services only 23% of all students in the University of Texas System, which has campuses of all over the State of Texas. As of July 2017, the State of Texas has an unemployment rate of 4.3%, which is the same as the national rate for July, and 0.8% lower than at the same time in 2016. The chart below (click to expand) shows the changes in the State of Texas and U.S. unemployment rates for the past ten years. MuniNet provides this data and more, easily accessible, for all 50 states and each Metropolitan Statistical Area in the country, in our Employment Database.
Provided at left (click to expand) is a quick snapshot of financial characteristics of the University of Texas System as of 08/31/2016, compared with the medians for other Public Colleges, Universities, and Higher Education Systems for 2015-2016, courtesy of Merritt Research Services, LLC. Merritt has many of the sector medians publicly available and regularly updated on their Benchmark Central page. (Merritt believes the data to be reliable but does not make any representations as to its accuracy or completeness). In addition to the Merritt information related to the featured bond, more information can be found on our municipal bond calendar, city, state, and county pages, and our employment database.
These facts and numbers are for informational purposes, and should not be considered an official disclosure for potential investors. Investors should consult the official statement. None of the information provided should be construed as a recommendation by MuniNet Guide, MuniNet LLC, Merritt Research Services LLC, or any of their employees. Information and analysis is for informational purposes only.
by Jeffrey L Garceau