Harvard University has reentered the bond market for the first time since a series of high-profile issues raised concerns about investor confidence in the prestigious university.
The school sold $750 million in taxable bonds, which mature on February 15, 2035, and yield 4.609%. They received a rating of AAA from S&P Global Ratings and Aaa from Moody’s Investors Service.
The bonds immediately attracted strong investor interest, indicating that last fall’s scandals, which included a donor revolt over the university’s handling of the Israel-Hamas war and allegations of plagiarism against the university’s president, are unlikely to contaminate its debt financing. Those scandals came to a head in January when University President Claudine Gay resigned under pressure from mega-donors.
As Harvard searches for a new president, Moody’s analysts wrote that the university is well positioned to handle its transition period without losing its Aaa credit rating. ”A strong institutional governance framework and deep bench of highly skilled administrators provide ample capacity to manage through this transitional period without adverse impacts to credit quality,” Moody’s analysts wrote.
Harvard will use the bond proceeds for “general corporate purposes,” according to the official statement accompanying the sale of the bonds.
Harvard is the latest Ivy League University to sell hundreds of millions in 2024 bonds. Last week, Princeton University issued $809 million in bonds that complemented $659 million it sold earlier this year. Harvard is expected to sell an additional $900 million in bonds in the coming weeks. It is also considering requesting that a state agency issue $500 million in bonds on its behalf, according to the bond documents.
The bonds are general obligations of the university, backed by its full faith and credit.
Goldman Sachs & Co LLC served as lead underwriter on the issuance.