October 10, 2012 (PLANSPONSOR.com) – The Art Institute of Chicago is selling about $100 million of taxable and tax-exempt bonds partly to shore up unfunded pension obligations.
Bloomberg reports the institute plans to issue about $61 million of tax-exempt debt as soon as this week through the Illinois Finance Authority and $40 million of taxable bonds itself, according to offering documents. The securities mature from 2013 to 2040. The sales will be led by Morgan Stanley.
With interest rates in the $3.7 trillion municipal market near their lowest level since the 1960s, “the current low-yield environment presents a very favorable opportunity for the Institute to refinance its debt and to re-examine its capital structure,” Erin Hogan, director of public affairs at the museum, stated in an email to Bloomberg. “We are hoping for strong demand for the bonds.” Proceeds of the museum’s taxable bond sale will be used “without limitation” to pay for “accelerating funding to the Institute’s unfunded pension-benefit obligations,” Hogan said.
The retirement plan had enough assets to meet about 65% of obligations to employees as of June 30, 2011, up from 53% the year before, Bloomberg data shows.