Touro University Nevada has taken part in a nearly $150 million bond sale to refinance existing debt and get some money for campus projects.
The Henderson medical school and three sister campuses — one in the San Francisco Bay area and two in New York — recently banded together to borrow $148.1 million. The Southern Nevada campus got about $40 million.
Officials spent $38 million of that to pay off existing loans, giving Touro more predictable though not necessarily cheaper interest rates.
The remaining $2 million, which under the terms must be spent within three years, is earmarked for an expanded student-services area and possibly rooftop solar panels as well, said Craig Seiden, associate vice president for administration in Henderson.
The schools borrowed the funds about three weeks ago, after Fitch Ratings stamped the bond issuance with a “BBB-” rating. That’s one notch above junk but still “good credit quality” with a low risk of default.
Most of the bonds were sold as tax-exempt municipal bonds even though Touro is a private, nonprofit higher-education system. Private companies around the United States, though, can sell such bonds with local government approval, and taxpayers typically are not on the hook if borrowers default on their payments.
In Nevada, the city of Henderson’s Public Improvement Trust, overseen by the city manager, approved Touro’s bond sale, as did the Nevada Board of Finance, overseen by the state treasurer.
When the finance board gave its approval in November, Gov. Brian Sandoval said the bonds would bring a higher interest rate initially but would save Touro money in the long run.
Touro had been borrowing money through traditional bank loans with interest rates that reset every two years, as they were pegged to LIBOR, an international benchmark of borrowing rates, Seiden said. Touro’s rates ranged between 3.85 and 5.15 percent and did not have a cap on how high they could climb.
Now, the loans carry fixed interest rates, mostly ranging between 4 and 5.25 percent but with some as high as 6 percent.
Even though borrowing costs are higher for some of Touro’s new debt, school officials know exactly how much they owe in debt payments each year and can better chart their annual campus-wide spending plans, according to Seiden.
“It just helps us plan better for the future,” he said.
Touro, on American Pacific Drive off Gibson Road, opened in 2004 and has 1,300 students. Its training programs include osteopathic medicine, physician-assistant studies, nursing and physical therapy.
The original Touro College was founded in 1970 in New York. The Jewish-affiliated system now has 19,000 students on 24 campuses in five countries.