1. The University, in connection with securities it has issued or proposes to issue, may enter into an agreement for an exchange of interest rates as provided in this section if the Board finds that such an agreement would be in the best interests of the University.

2. The University may enter into an agreement to exchange interest rates only if:

(a) The long-term debt obligations of the person with whom the University enters the agreement are rated “A” or better by a nationally recognized rating agency; or

(b) The obligations pursuant to the agreement of the person with whom the University enters the agreement are either:

(1) Guaranteed by a person whose long-term debt obligations are rated “A” or better by a nationally recognized rating agency; or

(2) Collateralized by obligations deposited with the University or an agent of the University which would be legal investments for the State pursuant to NRS 355.140 and which have a market value at the time the agreement is made of not less than 100 percent of the principal amount upon which the exchange of interest rates is based.

3. The University may agree, with respect to securities that the University has issued or proposes to issue bearing interest at a variable rate, to pay sums equal to interest at a fixed rate or rates or at a different variable rate determined pursuant to a formula set forth in the agreement on an amount not to exceed the principal amount of the securities with respect to which the agreement is made, in exchange for an agreement to pay sums equal to interest on the same principal amount at a variable rate determined pursuant to a formula set forth in the agreement.

4. The University may agree, with respect to securities that the University has issued or proposes to issue bearing interest at a fixed rate or rates, to pay sums equal to interest at a variable rate determined pursuant to a formula set forth in the agreement on an amount not to exceed the outstanding principal amount of the securities with respect to which the agreement is made, in exchange for an agreement to pay sums equal to interest on the same principal amount at a fixed rate or rates set forth in the agreement.

5. The term of an agreement entered into pursuant to this section must not exceed the term of the securities with respect to which the agreement was made.

6. The University’s obligations to make payments under the agreement may be secured by any of the pledged revenues that are pledged to the securities in connection with the agreement as executed, so long as the pledge does not violate the terms of any resolution or other instrument appertaining to outstanding securities issued hereunder.

7. Limitations upon the rate of interest on securities do not apply to interest paid pursuant to an agreement entered into pursuant to this section.

8. If the University has entered into an agreement pursuant to this section with respect to those securities, it may treat the amount or rate of interest on the securities as the amount or rate of interest payable after giving effect to the agreement for the purpose of calculating:

(a) Rates and charges of a revenue-producing enterprise whose revenues are pledged to or used to pay the securities;

(b) Statutory requirements concerning revenue coverage that are applicable to the securities; and

(c) Any other amounts which are based upon the rate of interest of the securities.

9. Subject to covenants applicable to the securities, any payments required to be made by the University under the agreement may be made from pledged revenues that are pledged to pay debt service on the securities with respect to which the agreement was made or from any other legally available source.

(Added to NRS by 2001, 2648)