Michigan State University’s Board of Trustees today approved the issuance of a new, innovative century bond to finance initiatives related to the university’s strategic plan.
Century bonds are structured to be repaid over 100 years. MSU is the first university in Michigan to seek the issuance of a century bond.
The board’s approval of the $500 million, 100-year bond resolution allows MSU to further its research and capital expenditures by providing a sustainable, low-interest funding source. Bond proceeds will be used to fund capital, infrastructure and technology investments, research programs and MSU health care initiatives.
“This is a unique opportunity to take advantage of the historically low interest rates to advance MSU’s strategic plan goals,” said MSU Chief Financial Officer Lisa Frace.
The final bond structure is subject to market conditions at the time of issuance. The bond’s 100‐year principal repayment enables the university to diversify its debt amortization schedule and support university initiatives for the next century. It also creates an investment fund at rates lower than the current cost of capital.
Board members praised the action, which also will improve the university’s financial stability.
“This opportunity to take advantage of 100-year financing is indicative of a new direction to improve MSU’s financial stability and exists because the financial markets respect the innovative direction of our president,” said MSU Trustee Pat O’Keefe.
“MSU is now in a position to attract faculty and projects with this financial commitment,” added Melanie Foster, MSU trustee and chair of the Board Committee on Budget and Finance.
The estimated timing to complete a century bond issuance is similar to other bond issuances — typically 90‐120 days from the date of approval by the Board of Trustees. MSU hopes to be in the market in the first quarter of 2022.
