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Oxford university has raised three times as much money as initially expected from its first ever bond, as strong investor demand allowed the triple-A rated institution to borrow at more attractive levels.
The 100-year-bond, which was launched earlier this week, was increased in size to £750m from £250m, and attracted close to £3bn in potential investment.
The ultra-long dated deal came with an annual coupon of just 2.5 per cent — lower than the rate implied by initial pricing expectations, and just 85 basis points above a UK government bond maturing in 2068.
The issue makes Oxford the latest in a series of UK universities to enter the bond markets. Last year, Cardiff borrowed £300m in 40-year debt at just 3.1 per cent, while Bristol borrowed £200m from a US investor in May this year.
“Looking around the world we could see that other universities had entered the bond market,” said Louise Richardson, vice-chancellor. “The time seemed opportune now, given the prevailing conditions and given the scale of our ambitions”.
Government funding for universities has been reduced over recent years, making them more dependent on student tuition and external financing. Last year UK higher education and schools raised $1.8bn in bonds — the highest level on record, according to data from Dealogic.
Oxford, which dates from the 11th century, plans to use the proceeds for long-term strategic projects and to further the academic mission of the university.
Universities, which are often seen as strong credits, have been able to borrow at extremely attractive rates on the back of low interest rates globally. Central bank activity has also generated demand across financial markets for long-dated securities.
JPMorgan was the sole bookrunner on the deal.