By Danielle Moran, Bloomberg
The University of California has shelved a $1.5 billion municipal-bond sale that had been slated for this week, according to a person familiar with the matter, a decision that comes amid a fight between the system and the Trump administration over federal funding.
The deal was expected to price the week of Aug. 17, according to a post on California’s debt-sale website captured by an internet archive. That notice is no longer on the state’s investor relations webpage.
Spokespeople for the University of California and Bank of America Corp., the joint senior manager, declined to comment. A representative for Jefferies, the book-running joint senior manager, didn’t respond to requests for comment.
The Bond Buyer reported the move on Wednesday.
The transaction from one of the most prestigious US public higher-education systems was set to include two tranches of general revenue bonds, one for $825 million and another for $675 million, according to an Aug. 12 report from Fitch Ratings. The company assigned the bonds an AA grade, the third-highest available. Proceeds were expected to fund various projects at its 10 campuses and six academic health centers, Fitch said.
The Trump administration has demanded more than $1 billion from the University of California at Los Angeles in exchange for releasing $584 million in federal research funding that the US froze amid concern about antisemitism and bias on campus.
Borrowers in the municipal-bond market are required to provide investors with information on risks that could impact the credit of the issuer. If California Governor Gavin Newsom, a Democrat, were to challenge the Trump administration’s actions in court, it would have made such disclosure challenging, according to the person familiar, who wasn’t authorized to discuss the deal publicly.
Newsom has been vocal in his opposition to the school settling with the administration. He said UCLA shouldn’t “bend on their knees” to the White House as he alleged other universities that settled had.
“We’re not Brown, we’re not Columbia,” Newsom said. “I will fight like hell to make sure that doesn’t happen.”
–With assistance from Elizabeth Rembert, Maxwell Adler and Amanda Albright.
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