Sydney Uni Sells First Australian University Bond Since 2010Benjamin Purvis
The University of Sydney sold its inaugural bond in the first offering by a major Australian educational institution since 2010.
Australia’s oldest university priced A$200 million ($189 million) of seven-year notes to yield 88 basis points more than the swap rate, according to a statement from Australia & New Zealand Banking Group Ltd., which managed the transaction along with National Australia Bank Ltd. The 4.75 percent senior unsecured bonds were initially marketed at a spread of about 95 basis points.
The sale of April 2021 notes is the first domestic deal from an Australian university since 2010, when both Macquarie University and the University of Wollongong raised money via bond sales. The higher learning institution, known colloquially as Sydney Uni, is raising funds as it undertakes a program to upgrade infrastructure across its various campuses.
The offering comes as demand for Australian dollar bonds from issuers other than banks and governments has helped to compress credit spreads to near the lowest in six years. Record-low central bank interest rates are also helping to cap borrowing costs. The average spread over the swap rate for Australian industrial bonds was 112 basis points yesterday, near a 111-basis point low reached in March last year that was the least since 2008, a Bank of America Merrill Lynch index shows.
Sydney Uni, which has more than 50,000 students and 3,000 academic staff, has established a A$600 million issuance program that has a preliminary rating of Aa1 from Moody’s Investors Service with a stable outlook. The program will be used to further investment in research and education facilities and partly refinance a A$500 million bank loan maturing in 2016, according to Moody’s.