The University of Michigan is authorized to establish up to $1 billion in additional standby lines of credit as a flexible alternative funding source for contingency purposes during a period of economic uncertainty and financial market volatility.
The Board of Regents approved the measure July 21. It doubles an existing authorization for lines of credit available for general operating purposes the board granted in March 2020.
“These lines of credit will be used primarily for contingent liquidity support for general corporate purposes,” wrote Geoff Chatas, executive vice president and chief financial officer, in a recommendation to the board.
“We believe this expansion to be a prudent and proactive course of action, at relatively inexpensive pricing, in light of significant uncertainty during an unprecedented period of inflation, supply chain disruption, geopolitical tensions and lingering COVID impact.”
The authorization extends through 2032, and no credit agreement entered into under this resolution could extend beyond that period without additional authorization.
The new lines of credit, like the existing lines of credit and the university’s outstanding bonds and commercial paper notes, will be supported by a pledge of the university’s general revenues.