Rensselaer Polytechnic Institute successfully sold $357 million in tax-exempt and $205 million in taxable bonds, in order to retire substantially all variable rate bonds outstanding, and to terminate all integrated interest rate swaps.

Interest rate swaps are financial instruments that provide a fixed interest rate to offset the potential for volatility on variable rate bonds. Given the recent interest rate upswing in the bond market, the pricing on the bonds was slightly more positive than anticipated, according to Virginia Gregg, Rensselaer vice president for finance and chief financial officer. The bonds are general obligations of the Institute and carry no restrictions or security interests.

Rensselaer has used debt and other resources over the last decade to implement The Rensselaer Plan , the strategic vision of President Shirley Ann Jackson, recently described by a Moody’s analyst as a transformative leader. Results of this leadership have included vividly substantial, beneficial changes to the academic stature, the physical facilities, and the student life programs of Rensselaer, Gregg said.

“These investments are paying off in terms of greater student demand and academic quality, increased research volume, faculty renewal, new degree programs and academic offerings, physical plant upgrade and expansion, including four significant and unique new facilities, and greater prominence,” she added. “Rensselaer has also substantially increased the financial aid it offers its students.”

Prior to this new issue, Rensselaer’s debt had been structured to take maximum advantage of a low interest rate environment over the period, resulting in millions of dollars of interest savings, which enabled the Institute to increase direct investment in its strategic transformation. Even during the height of the credit crisis, Rensselaer’s debt structure minimized the impact of interest rate volatility that some other universities experienced.

With interest rates anticipated to continue to rise, according to Gregg, Rensselaer is now simplifying its debt structure and locking in interest expense as the original Rensselaer Plan investment period comes to fruition. At the end of the restructuring, all interest rate swaps and variable rate debt will be eliminated.

“Rensselaer was able to achieve this re-financing because of the value proposition inherent in the significant transformation achieved through The Rensselaer Plan, which has shown clear evidence of our success to the credit rating agencies and bond buyers,” Gregg said.

Contact: Mark Marchand
Phone: (518) 276-6098
E-mail: marchm3@rpi.edu