Innovative Resources Group

National Public Radio Sells $160 Million in Tax Exempt Bonds

National Public Radio, which depends on corporate donors for almost one-third of its revenue, plans to sell $160 million in tax-exempt bonds today amid the biggest wave of such issuance since January.

The largest noncommercial radio producer in the U.S., with news programs such as “Morning Edition” and “All Things Considered,” will offer fixed-rate bonds through the District of Columbia to help finance construction of a national headquarters there, according to a Moody’s Investors Service statement.

Municipalities sold $8.9 billion of tax-exempt debt last week, the most since Jan. 15, according to data compiled by Bloomberg. The spate of sales comes as yields on top-rated general obligation bonds are holding close to a three-month low. Moody’s and Standard & Poor’s assigned NPR ratings of Aa3 and AA-, respectively, the fourth-highest of 10 investment grades.

“A lot of organizations now are feeling comfortable with the economy and seeing interest rates dipping,” said William Liggins, director of D.C.’s revenue bond program, in a phone interview. Issuers are saying “let’s get in now before things begin to move up,” he said, referring to interest rates.

Yields on AAA rated 10-year bonds have held within 2 basis points of 3 percent for more than two weeks, the lowest since Dec. 10, according to a Municipal Market Advisors’ daily survey. A basis point is 0.01 percentage point.

Industrial Production

In signs the economy may be improving, industrial production increased for an eighth straight month in February, Federal Reserve data showed yesterday. Retail sales have risen in four of the past five months.

NPR will have $165.2 million of rated debt outstanding with this sale and has no further borrowing plans, Moody’s said in a March 4 research note. A mortgage lien on the new building in Washington will secure payments on the debt, Moody’s said.

A nonprofit, nongovernmental organization established in 1970, NPR provides programs to more than 900 stations in the U.S., according to its Web site.

The service gets 36 percent of its annual revenue from licensing fees paid by individual stations and 29 percent from corporate sponsors, and doesn’t raise funds from the general public, according to Moody’s. Thirteen percent of Americans age 12 and over listen to public radio, S&P said.

NPR will use $10 million in reserve funds and $58 million from the sale of current facilities for construction of the new headquarters, Moody’s said in Feb. 18 statement. NPR said it will break ground later this year and expects to finish by June 2013.

The broadcaster is planning to boost fundraising and may include a five-year call provision in the bond sale, Moody’s said.

Published in  Bloomberg March 16, 2010