Yale to issue $100m in bonds
Yale plans to issue $100 million in bonds through the Connecticut Health and Educational Facilities Authority, according to Bloomberg Businessweek.
The proceeds of the municipal bond sale will be used to refinance maturing debt that the University issued in 2003 to pay for construction and renovation projects. Yale will agree to pay bondholders a variable interest rate rather than a fixed interest rate, but the University said in offering documents that it will attempt to avoid higher interest expenses by using interest-rate swaps to convert the floating rate to a fixed rate.
The sale comes at a time when the $3.7-trillion municipal bond market is experiencing a downswing. Issuers of benchmark 10-year municipal bonds must currently pay bondholders higher interest rates than they have had to since March 2012, according to Bloomberg data.
Yale had $4.1 billion of debt outstanding as of the end of fiscal year 2012. Moody’s Investor Service, a prominent credit ratings agency, renewed the University’s Aaa credit rating in January, indicating the agency’s confidence that Yale will honor its commitments to bondholders.