DALLAS _ The Texas agency set up to find cures for cancer returned to the municipal bond market to raise money for research for the first time since a scandal shut it down three years ago amid civil and criminal investigations of favoritism in awarding grants.
The state sold $369.8 million of top-rated, taxable general obligation bonds on Wednesday at an average interest rate of 3.29 percent, said Jorge Rodriguez, head of public finance for Coastal Securities Inc., the financial adviser on the sale. The 10-year bonds were priced at a yield of 2.83 percent, slightly below the market rate of 2.88 percent, according to data compiled by Bloomberg.
The Texas Public Finance Authority, the state conduit for issuing the debt, got $1.1 billion of orders and was able to ratchet down the rates given the advantage of carrying the state’s AAA credit ranking from the three main debt-rating companies, Rodriguez said.
“We were pricing it very aggressively and were able to move the price down all along the curve,” said Rodriguez, referencing the difference between shorter- and longer maturity debt known as the yield curve.
Former Texas Gov. Rick Perry, R, who left office this year, and Lance Armstrong, the cancer survivor who lost his Tour de France titles for doping, touted the creation of Cancer Prevention and Research Institute of Texas in 2007, when voters approved $3 billion of taxpayer-backed bonds for the agency.
In 2012 the agency’s work was put on hold after spending $836 million amid allegations of favoritism in awarding research grants, in part because or civil and criminal probes that led to one indictment. The defendant in that case was acquitted. Amid the probes, state lawmakers in 2013 restructured the agency to prevent favoritism in grant making and the agency returned to work under new leadership and began awarding grants again, it’s work funded with commercial paper.
Perry’s goal for the agency was to expand economic development by boosting the second-largest state’s universities and bringing treatments to market. The agency’s work has led to 84 new clinical trials of cancer treatments, brought 100 cancer researchers to the state and created 4,700 other jobs and provided to 2.5 million preventive services, such as screenings that can lead to early detection of the disease, according to agency documents.
This week’s bond sale will provide funds for research grants and refinance commercial paper. The agency did borrow $233.28 million in 2014 to refund commercial paper issued to pay for research.