February 17, 2012 12:11:00 PM
JACKSON -- Higher education officials will allow Mississippi State University to enter the "commercial paper" market to obtain $50 million for future construction projects.
The state College Board approved Mississippi State's request Thursday.
The commercial paper market is short-term IOUs that companies sell to meet cash-flow needs. Issuing commercial paper is a way for companies to borrow money for short periods of time to finance their day-to-day operations. Most commercial paper is unsecured debt, but some of it is backed by assets such as mortgages and credit card debt.
The Clarion-Ledger reports that MSU must get further board approval for each specific project where it would be used -- for example, in the plans to improve and expand the Davis Wade Stadium.
"This is something that I've been convinced will allow us to more efficiently and more effectively manage some of our larger capital projects," MSU President Mark Keenum said at Thursday's board meeting. "It will save us millions of dollars in interest costs."
Commercial paper is not available to all Mississippi public universities. As it is targeted for large, ongoing capital projects, $50 million is the minimum program size, and an eligible institution would need to have liquid investments equal to 1.5 times that amount.