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Double First for Oxford With University's Debut Century Bond

Updated on
  • British institution taps market for 750m pounds over 100 years
  • Moody’s triple-A rating helps secure 2.8b pounds of orders

Not many institutions could sell 100-year debt in their first foray in the capital markets. But then, not many have been around since the 11th century.

The University of Oxford on Friday priced 750 million pounds ($1 billion) of bonds due in 2117 to yield just over 2.5 percent, in what may be the first 100-year obligation to be sold by a debut issuer, according to data compiled by Bloomberg. While the sale is not the only bond to have originated in Oxford -- some of the university’s colleges have sold debt in the past -- it is the first from the institution as a whole.

The university joins a host of higher-education institutions to have tapped debt capital markets as they diversify sources of long-term funding. But none has attempted a century-long note, let alone in a debut sale. The success of the issue underscores just how conducive market conditions have become, with interest rates still near rock bottom and investors crowded out of many high-grade names thanks to quantitative easing.

The bonds’ 2.544 percent coupon compares with the 3.75 percent that University of Cambridge agreed to pay in a sale of 40-year bonds back in 2012, according to data compiled by Bloomberg. The Oxford notes were at least three times oversubscribed with interest from investors across the globe, according to Louise Richardson, the university’s vice chancellor.

Vote of Confidence

“It’s a real vote of confidence in the future of the university,” Richardson said by phone. “It will accelerate our ability to invest in our academic mission.”

The university plans to spend 1.5 billion pounds on capital projects over the next 10 years to 15 years, Richardson said. It has spent 750 million pounds on similar works in the past five years, such as revamping part of the famous Bodleian libraries, according to a statement. The university, which traces its origins back to at least 1096, has educated 27 British prime ministers including Theresa May.

Demand for longer-duration debt remains robust. Argentina and Austria sold similar century bonds earlier in 2017. Argentina’s dollar bond yielded around 5.125 percent above 30-year Treasuries when it priced and Austria’s euro-denominated securities priced at 50 basis points over the country’s 30-year benchmark.

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