The University of Oklahoma has provoked a confrontation with some of the largest investors in the tax-exempt bond market, propelling a struggling $250 million student-housing project on the path to default, WSJ Pro Bankruptcy reported. UMB Bank NA, the trustee for bondholders that financed the luxury dormitory project, said in a letter Friday that officials had turned their backs on the bond market by failing to renew leases on the facility’s commercial spaces and parking spots. The lease terminations tied to the university’s Cross Village dormitories removed a key source of revenue for the housing project, heightening the likelihood that investors won’t be paid in full. Those investors include Invesco Ltd. and MacKay Shields LLC, a person familiar with the matter said. Already, the project has dipped into reserve funds to stay current on debt obligations. “This reckless repudiation makes the entire transaction appear like the university wants the project to fail for the pecuniary benefit of the university and at the expense of investors,” UMB said. On Tuesday, the university’s attorney said it “broke no promise, but simply exercised its explicit contractual rights” to walk away from leases it no longer wanted.
