Bond issue to pay for BDS expansion

The University of Alabama will increase its stadium capacity to more than 101,000 via an expansion, according to Ian Rapoport of the Birmingham News. The expansion will be financed with a bond issue of $80,609,846. The story quotes UA Athletic Director Mal Moore as saying the University is not yet to the final approval phase of the expansion process.

The most interesting element of the expansion is the bond issue and its timetable. The credit markets have been reacting oddly over the last year, so when the bonds are offered will be important. It looks like the bond markets are experiencing some improvements as yields are falling as deflationary fears surge. According to the AP (report can be read below): “Although the market for Treasury bills showed how anxious investors are — many are willing to take the slimmest of returns in order to preserve their principal — there are signs that the credit markets continue to ease.” Of course, there is no guarantee investors are as open to state, municipality and other governmental debt as they are to US Treasury debt. However, as yields fall and further rate cuts likely loom on the horizon, this debt could be attractive. Timing will be very important.

The bond issue would also be carried out in the aftermath of a meltdown in university endowments. Moody’s has estimated college and university endowments have lost an average of 30 percent this year.