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Arizona College’s Mega-Borrowing Breaks Bond-Market Ground

  • Grand Canyon University sells $1.2 billion of junk-rated bonds
  • It’s first college corporate junk-bond deal: Bloomberg data

A private university in Arizona broke new ground in the fixed-income universe this month with a $1.2 billion debt sale, in the first junk borrowing to hit the corporate-bond market from the higher-education sector. 

The sale by Grand Canyon University, a mostly online college in Phoenix that was founded in 1949, stands out among the pristine school credits that typically bring large corporate deals. Those issuers are often top-rated Ivy League names, with endowments in the billions of dollars. Grand Canyon University is rated Ba1 by Moody’s Investors Service, one step below investment grade, and according to Bloomberg data, its bond issue is unprecedented.