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Yale’s $250 Million of Munis Will Renovate Campus Buildings

July 8 (Bloomberg) -- Yale University is set to borrow $250 million as soon as tomorrow to help fund renovations to academic, medical, library, administrative and athletic facilities on the campus in New Haven, Connecticut.

The AAA rated tax-free bonds will be issued through the Connecticut Health and Educational Facilities Authority, offering documents show. The documents also said a portion of proceeds would help fund two new residential colleges.

Yesterday, Tom Conroy, a spokesman, said that he couldn’t elaborate on the debt sale beyond the offering documents.

Today, Alex Banker, who oversees capital markets activities for the school’s investments office, said via e-mail that while the papers are “technically correct,” Yale has raised enough through gifts to cover estimated construction costs for the residences and debt “would only be used in the event of cost escalations.”

Universities can access the $3.7 trillion municipal-bond market through agencies that issue the tax-exempt debt on their behalf. Yale offered $250 million of taxable notes on its own in April.

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Yale benefits from “its international reputation as a premier academic and research intensive university, as demonstrated by its extraordinarily strong student demand and history of superior fundraising,” Moody’s Investors Service analysts led by Karen Kedem wrote in a report.

It also has “exceptionally robust financial reserves that provide excellent coverage of debt and operations,” the authors wrote.

Yale has $3.4 billion of Moody’s-rated debt outstanding, according to the company. It has a $20.8 billion endowment, second only to Harvard University, according to the National Association of College and University Business Officers and Commonfund Institute.

The school, which has alumni including former President George W. Bush and Nobel Prize-winning economist Paul Krugman, had a 6.3 percent acceptance rate for the class of 2018, taking 1,935 students from a pool of 30,932. The two new residential colleges will expand each undergraduate class by about 200 students, according to a report on the university’s website.

To contact the reporter on this story: Brian Chappatta in New York at

To contact the editors responsible for this story: Stephen Merelman at Mark Schoifet

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