Wells Fargo Securities, the investment banking and capital markets business of Wells Fargo & Company announced that it served as sole underwriter in the recent sale of $44.8 million in bonds issued byMontana State University(MSU) to pay for the design and construction of a new residence hall at MSU’s Bozeman campus.
Construction of the new residence hall comes as a record-setting number of students are enrolling at MSU. In contrast with declining enrollment at universities nationwide since 2010, MSU’s enrollment has steadily increased for the past 10 years, with enrollment records being set nine times since 2009. Enrollment at the Bozeman campus saw a 14percent increase between 2013 and 2017 and now totals 16,703 students.
“As enrollment continues to increase at Montana State University, Wells Fargo Securities is proud to play a part in the expansion of the MSU campus by serving as underwriter for the issuance of the university’s residence hall bonds,” said Stratford Shields, head of Public Finance at WellsFargo Securities.
The university expects construction on the new 480-bed residence hall to begin in May, with completion in 2020.
“Montana State University has a wonderful story to tell,” said Laura Humberger, MSU’s associate vice president for financial services. “We appreciate the work by the teams from WellsFargo Securities, Dorsey & Whitney, and North Slope Capital in helping us translate our story into lower interest rates than we anticipated. In the coming decades, thousands of students will benefit from the low interest rates the team achieved today.”
WellsFargo Securities structured the transaction with serial bonds that amortize from 2019 through 2039 and term bonds due in 2043, 2045, and 2047. All-in interest cost for MSU was 3.65 percent with an average life of about 19 years. Strong investor demand pushed total orders to $227.4 million, resulting in oversubscription of most maturities and oversubscription of 5.1 times in aggregate, and tightening of spreads by two to nine basis points on most maturities.
WellsFargo Securities, its affiliates, and their predecessors have provided investment banking services to MSU since 1993, and since 2004, have led all of MSU’s public market financings, totaling more than $300 million. Wells Fargo also serves the students and faculty of MSU through an ATM on the Bozeman campus.
WellsFargo has a long history of commitment to higher education and serves hundreds of institutions and endowments nationwide. In 2016, Wells Fargo raised $16.1 billion in capital for U.S. colleges and universities. WellsFargo Securities and an affiliate also traded in the secondary market $4.4 billion in tax-exempt bonds and $1.6 billion in taxable bonds issued by colleges and universities. In addition, the WellsFargo Foundation is among the largest financial contributors to education in the U.S. In 2017, it awarded $13.4 million to 571 educational programs and schools nationwide.
The finance team for the bond sale also included North Slope Capital Advisors as financial advisor and Dorsey & Whitney as bond counsel.