Emory University Series 2020A & 2020B

21 May

Case studies

Emory University Series 2020A & 2020B

Bond Sale Date: May 13 & 20, 2020

$943,750,000 Series 2020A Taxable Fixed Rate Bonds

$486,470,000 Series 2020B Tax-Exempt Fixed Rate Bonds

About Emory University

Emory University (“Emory”) is a privately endowed national teaching, medical and research center located in Atlanta, Georgia. Emory attracts top quality students from across the nation and abroad, and had a fall 2019 total enrollment of 15,400 students. Emory’s student population is drawn from all regions of the United States, as well as over 40 foreign countries. In U.S. News & World Report’s annual ranking of “America’s Best Colleges,” Emory ranked 21st among national universities in 2020 and has been included in its Top 25 list since 1992.

Emory includes one of the nation’s leading academic, research and patient-care medical complexes, the Robert W. Woodruff Health Sciences Center (“WHSC”). The WHSC includes the Emory University School of Medicine, Nell Hodgson Woodruff School of Nursing, Rollins School of Public Health, Yerkes National Primate Research Center, Winship Cancer Institute, Emory Global Health Institute, and Emory Healthcare (“EHC”).   The integrated healthcare operation represents over two-thirds of Emory University’s enterprise and includes 11 hospitals.  In response to COVID-19, Emory has expanded its testing capacity to greater than 800 specimens per day and Emory was the second site in the country for the Moderna Inc. vaccine trial.

Pricing Results

Credit Ratings: Aa2/AA (Moody’s/S&P)

Emory University Pricing Results

Focus on Value

Ponder & Co. (“Ponder”) worked closely with Emory’s management and governance during the past eight months to plan and execute the sale of a publicly-offered taxable and tax-exempt fixed rate bond issue for a combination of new money projects, as well as multiple refundings that addressed 51% of Emory’s outstanding debt.

Ponder supported Emory through all aspects of the financing, including facilitating competitive RFPs for underwriter and potential private bank financing, plan of finance analysis and development, board communication, disclosure modifications during the time of COVID-19 developments, and working with underwriters to achieve the most favorable bond sale structure and pricing. Ponder helped Emory create a plan of finance that would reduce the risks of variable rate debt portfolio including eliminating self-liquidity while maintaining a manageable cost of capital.

Ponder worked with Emory management to navigate the volatile markets and secure a financing that would provide optimal results.  During March and April, Ponder assisted Emory with analyses of bank lines of credit for liquidity as well as private placement debt in lieu of public debt.  Comparing the bank pricing and covenants to the taxable public market conditions, Ponder advised Emory to continue on the public route which ultimately saved the university $12 million in interest costs over 10 years.  Ponder also advised on allocation of par from the tax-exempt deal to taxable, and vice versa to produce the best cost of capital given the volatile market conditions.  Given the weakness in April and early May of the tax-exempt market relative to the taxable market, Ponder worked with Emory to reallocate a 7 year tax-exempt put bond to a 5 year taxable bullet.  During the week of May 11th, the tax-exempt market tone improved and Emory decided to allocate $124 million of the taxable 10 year maturity to the tax-exempt market and change its put bonds to bullet maturities, saving an additional $12.6 million in interest over 10 years. On both pricing days, Emory received strong demand with up to 9.7x subscription of final orders from 80 unique investors. With strong demand, credit spreads were able to be tightened by 10 basis points in the 5-year taxable maturity and up to 15 basis points in the long-term tax-exempt maturity.  Emory locked in an all-in cost of capital of 2.52%.  The refunding of Series 2011A generated over $33.1 million in PV savings for Emory.