The Lemon Fool

In case anyone missed it …

“Oxford University raises £750m after issuing 100-year bond and can 'confidently' plan for the future”
http://www.oxfordmail.co.uk/news/15697684.Oxford_University_raises___750m_after_issuing_100_year_bond_and_can___39_confidently__39__plan_for_the_future/

The 100-year maturity on the bond, with a coupon rate of 2.5%, is the longest of any other universities that have issued bonds. The University decided to raise the money - the first ever bond it has issued - as conditions in the financial markets permit borrowing at historically low rates.
Moody’s have AAA rated the bond and I understand JP Morgan, as the sole book-runner, had no problems floating this £750-million bond issue. Initially tasked with raising £250-million the FT reports this was soon raised to £750-million as a result of strong UK and overseas demand.

The issue makes Oxford the latest in a series of UK universities to enter the bond market. Last year, Cardiff borrowed £300-million in 40-year debt at just 3.1 per cent, while Bristol borrowed £200-million from a US investor in May this year. Having long been a practice of universities in the US, it’s noticeable of late that UK universities have been turning to the bond investors to raise capital. But the Oxford £750-million issuance is by far the largest and longest maturity to date.

Who’ll be next! Cambridge.

Cambridge issued a 40 year bond in 2012. This offered a 3.75% coupon at the time. Price is now near 139 level or a GRY of around 2.1%. Note that minimum size of this and the Oxford bond is £100,000. A number of other universities have issued bonds since 2012 - De Monfort, Cardiff, Leeds, Manchester and Southampton. Only Cambridge and Oxford have been rated Aaa by Moody's (i.e. better than the UK).

No wonder the minimum size is pretty high and astronomical for the rest of us buying bonds at 2-3% yield is simply bonkers.

JMN2 wrote:No wonder the minimum size is pretty high and astronomical for the rest of us buying bonds at 2-3% yield is simply bonkers.

edit: sorry, not sure where I saw the min size would be 100k, regardless, only a big family wealth fund would buy bonds at 2% yield.