Princeton University to Tap Muni Market in $200 Million Sale

Princeton University, one of the world’s wealthiest schools, plans to borrow $200 million through the municipal market in January.

The New Jersey Educational Facilities Authority will issue bonds for the Ivy League school, according to a report today from New York-based Moody’s Investor’s Service. The company gives Princeton a top Aaa rating, citing its “exceptional student market position” and “robust financial resources.” Martin Mbugua, a university spokesman, said proceeds would be used for capital projects.

Princeton in October reported an 11.7 percent return on its investments in the 12 months ended in June, up from a 3.1 percent gain a year earlier. The endowment’s value grew by $1.2 billion to $18.2 billion. It’s the fifth richest in the U.S., according to the National Association of College and University Business Officers and Commonfund Institute.

“Generous support from this endowment allows the university to fulfill its educational mission and to charge lower tuition than its peers,” Moody’s said. “While debt has escalated in recent years, the university’s unrestricted financial resources cover that debt several times over.”

The bond sale is set for Jan. 8, according to Moody’s. Princeton has about $3.2 billion of debt outstanding, the company said.

Some Princeton debt trades at lower yields than benchmark municipal bonds.

Tax-exempt debt issued by the New Jersey educational agency on behalf of the university that matures in July 2022 traded yesterday at a yield of 1.9 percent, data compiled by Bloomberg show. That compares with an interest rate of 2.75 percent on top-rated munis with a similar maturity, the data show.

To contact the reporter on this story: Brian Chappatta in New York at bchappatta1@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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