Loop Capital Markets Serves as Joint Bookrunner and ESG Coordinator on the University of Michigan’s $2 Billion General Revenue Bonds, Series 2022AB (Taxable)

On March 9, 2022, Loop Capital Markets served as Joint Bookrunner and ESG Coordinator on the University of Michigan’s (the “University”) $2 billion General Revenue Bonds, Series 2022AB (Taxable) (the “Bonds”). The Bonds were rated Aaa (Stable) / AAA (Stable) by Moody’s and S&P, respectively.

The structure of the Bonds consisted of three bullet maturities including $300 million in Green Bonds with a 30-year maturity and make-whole call (par call six months prior to maturity), $500 million with a 30-year maturity and a make-whole call (par call six months prior to maturity), and $1.2 billion with a 100-year maturity and a make-whole call (par call six months prior to maturity). The century bond is the largest ever sold in the higher education space to-date. The Firm’s salesforce generated $117 million of priority orders from Tier-1 bond funds and insurance companies.

The Bonds will finance capital projects and assist the University in creating a central bank model for financing its capital projects. Additionally, the Series 2022B Bonds (designated as Green Bonds) will finance Green Buildings (LEED Silver or Platinum certification), Renewable Energy (geothermal heating and cooling facility), Energy Efficiency (development of a Revolving Energy Fund to finance projects across the campuses), and Clean Transportation (electric buses).

With input from the Firm, the University opted for a third-party verification of the Green Bonds due to perceived investor preference and the complex nature of the Green Bonds that are more expansive and unique than most. Given procurement rules, the University needed to select a third-party verifier through a competitive request for proposal. The Firm assisted in this process by providing examples of request for proposals for third-party verifiers, reviewing the RFP before being released, coordinating with each third-party verifier in the municipal market to provide the University with direct contacts, exploring scoring metrics to consider when selecting a third-party verifier, including higher education experience and timing of the final report. Ultimately, the University selected Kestrel as its third-party verifier and the Firm was actively involved during due diligence and crafting the verification report.

In addition, the Firm worked with the University and its disclosure counsel providing feedback on ESG disclosures for the offering document based on recent ESG transaction of comparable higher education institutions. The Firm worked with the University and the other joint bookrunner to review and provide feedback on the investor presentation, which included two slides on the Green Bond designation and the University’s commitment to sustainability and carbon neutrality.