Cornell University issued $500 million in taxable bonds to finance campus improvements and refund previously issued securities.
The bonds mature on June 15, 2034, and yield 4.835%. They received a rating of Aa1 from Moody’s Investors Service and AA from S&P Global Ratings.
The rating “incorporates Cornell’s superior student market strength as a highly selective university with national and global draw which underpins its exceptional brand and strategic positioning,” Moody’s analysts wrote.
Cornell is the latest Ivy League University to sell hundreds of millions in bonds to fund campus projects. Princeton University tapped the bond market for more than $1 billion in March, and Harvard University sold $750 million in bonds the same month. Harvard is planning another sale this month.
Analysts say the universities are taking advantage of a lower interest rate environment for municipal issuers than prevailed for much of 2023. Universities could also be seeking to secure financing ahead of the summer, when they take advantage of a lower number of students on campus to enact major construction projects.
The Dormitory Authority of the State of New York expects to issue an additional $610 million in tax-exempt bonds on behalf of Cornell next week.
Cornell will use the proceeds from the two issuances to upgrade campus infrastructure at its primary location in Ithaca as well as its medical school campus in New York City. The bonds will also refinance existing debt.
The taxable bonds are general obligations of the university, payable by its revenue.
Goldman Sachs & Co LLC and BofA Securities, Inc served as underwriters on the issuance. The Yuba Group LLC acted as financial advisor.