On July 11, 2023, Texas Southern University priced its $80.680 million Revenue Financing System Bonds, Series 2023 with Loop Capital Markets serving as the bookrunner for the financing. The Bonds have a rating of BBB+ by Fitch with an enhanced rating of AA by S&P. They are structured as serial maturities amortizing from May 1, 2024, to May 1, 2042 – 5.000% coupons from 2024-2033, and 5.250% coupons from 2034-2042. Bond proceeds will be used to provide funds to the Board of Regents to construct the Nabrit Science Building, the Catalyst for Urban Transformation, and health and wellness center, to upgrade signage and wayfinding, and to pay costs of issuance of the Bonds.
The market experienced a heavy supply of Texas paper following a muted holiday week with an anticipated Texas supply of over $2 billion. Loop Capital Markets developed a comprehensive marketing plan for the University and TPFA that capitalized off the anticipated supply. The strategy involved contacting more than 45 accounts which included current holders and potential targets of comparable credits.
The transaction was sponsored primarily by Bond Funds (62%) with seven investors submitting orders in excess of $40 million, including one account that submitted orders equivalent to the size of the entire transaction. Long-dated 5.250% coupon maturities garnered the greatest attention among interested investors. Given the bond’s strong performance, the Firm was able to tighten spreads by up to 15 bps. As a result, $98.130 million of priority orders were dropped, resulting in $660.700 million of priority orders after repricing, or 8.2x subscription.