Cambridge Uni to raise £350m in a bond issue

Marion Dakers
CAMBRIDGE University plans to make the most of the buoyant bond market to raise £350m to pay for upgrades to facilities.

The 803-year-old establishment joins a growing number of universities tapping the capital markets for cash in recent years.

Cambridge will issue 40-year notes with a 3.75 per cent coupon to fund investment in research facilities, accommodation and other assets, the university said in a statement yesterday.

Moody’s is expected to award an AAA rating with a stable outlook on the debt – a higher rating than the UK government’s bonds enjoy.

The bonds were priced at a spread of 0.60 per cent over UK gilts.

“We are delighted by the success of this issue, and by the strong support shown by investors in the university and its mission,” said vice-chancellor Professor Sir Leszek Borysiewicz.

Cambridge has been preparing for a bond issue since early 2010, having secured permission from its governing board, but has waited until now to launch its fundraising.

It follows in the footsteps of several UK institutions to tap the markets, including Leicester De Montfort, which raised £110m through a bond issue in July.

Lancaster University took the plunge in 1995, issuing bonds worth £35m to pay for better library facilities, but later restructured the debt.

Others, such as Imperial and Edinburgh, are thought to have raised money through private placings.

In the US, Ivy League institutions including Harvard and Princeton have long used the bond markets to fund operations.

HSBC, Morgan Stanley and RBS acted as joint bookrunners on Cambridge’s bond sale, and Rothschild provided independent debt advice.

The bonds will be formally issued on 17 October.