UT System saves more than $18 million in one financial move

Despite an extremely crowded municipal bond calendar, UT System finance staff executed the successful refunding, generating $18.8 million of present value debt service savings. Finance staff sold RFS Refunding Bonds, Series 2016I for the purpose of refunding $202 million of outstanding tuition revenue bonds. Lower debt payments result in significant direct savings for the state because debt service for these bonds is reimbursed through state appropriations.   Nominal debt service savings achieved by the System exceeded $20.9 million while the System’s outstanding debt was reduced by $17.3 million. 

“This success story is an outstanding example of the talent and expertise in our Office of Finance and I am proud of the work they do in service to the State of Texas,” said Scott Kelley, Ph.D., UT System’s executive vice chancellor for business affairs. “Our mission is to serve and support UT institutions – and ultimately the state of Texas – and to be good stewards of the resources with which we have been entrusted. This refunding illustrates how we can provide UT institutions with the capital they need to educate students, conduct research and treat patients, while also acting in the best interests of Texas taxpayers.”

Over 40 high quality retail and institutional investors submitted orders to purchase these UT System bonds, generating great competition and driving interest rates even lower than the original offer price – saving the state even more money. Morgan Stanley served as senior manager on the transaction.

About The University of Texas System

Educating students, providing care for patients, conducting groundbreaking basic, applied and clinical research, and serving the needs of Texans and the nation for more than 130 years, The University of Texas System is one of the largest public university systems in the United States. With 14 institutions and an enrollment of more than 221,000, the UT System confers more than one-third of the state’s undergraduate degrees, educates almost two-thirds of the state’s health care professionals annually and accounts for almost 70 percent of all research funds awarded to public institutions in Texas. The UT System’s operating budget for FY 2017 is $17.9 billion, including $3 billion in sponsored programs funded by federal, state, local and private sources. With more than 20,000 faculty – including Nobel laureates and many members of the National Academies – and nearly 80,000 health care professionals, researchers, student advisors and support staff, the UT System is one of the largest employers in the state.