Cape Cod Institute That Found the Titanic Sells Bonds: Joe Mysak

(Bloomberg) -- The folks who found the Titanic are selling bonds next week.

The Woods Hole Oceanographic Institution, on the southwestern tip of Cape Cod, is selling $75 million in revenue bonds through the Massachusetts Development Finance Agency to refinance a 2008 deal and pay for a new building and maintenance work.

Robert Ballard was the Woods Hole scientist who in 1985 was the first to see the doomed ocean liner since it disappeared beneath the waves 73 years earlier. Few discoveries so captured the public’s imagination.

Woods Hole, founded in 1930, is a research organization that also awards graduate degrees jointly with the Massachusetts Institute of Technology. The institution has 940 paid staff, more than half of whom are engaged in scientific research, according to the preliminary official statement to the deal.

The institution is located in the village of Woods Hole and at the nearby 190-acre Quissett campus.

As it says in the initial offering statement, however, "The Bonds are not secured by a mortgage lien or security interest in any real or personal property of the Institution.” They’re backed by the organization’s promise to pay. That’s worth a AA- grade (with a negative outlook) by S&P Global Ratings.

Woods Hole is supported by federal grants and sponsored research funds, which amounted to $192.2 million in 2016. Philanthropic gifts totaled $22.7 million in 2016. It also has an endowment of $415.9 million.

The main risk factors for the Woods Hole bonds have names: the National Science Foundation, the Office of Naval Research and the National Oceanic and Atmospheric Administration. "Changes in research funding at the Institution could occur if more promising research is being conducted at other research centers, or if the Institution should lose key personnel or if research to which the Institution has devoted significant resources is disproved,” according to the POS.

So the main bet here is on Woods Hole’s future as an enterprise in oceanographic research, and on its continued ability to keep the research dollars flowing. And if you think about it, that’s what this bond issue is all about: Keeping Woods Hole’s place at the front of the line.

(This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.)

©2018 Bloomberg L.P.