The Massachusetts Development Finance Agency sold $735 million in bonds to finance capital improvements and refund previously issued securities.
The tax-exempt bonds mature between 2030 and 2036, yielding between 2.63% and 3.03%. They received a rating of AAA from S&P Global Ratings and Aaa from Moody’s Investors Service.
“The Aaa issuer rating reflects Harvard’s superior credit quality as a premier and globally recognized comprehensive university benefitting from extraordinary student demand, exceptional fundraising and extensive research capabilities,” Moody’s analysts wrote.
The bonds, which sold at the ratings agencies’ top rating and for a significant premium, indicated Harvard’s economic resilience in the face of a major scandal. Harvard President Claudine Gay resigned in January amid allegations of plagiarism and criticism for her handling of the campus’ response to rising antisemitism amid the Israeli-Palestinian conflict. The university has not yet appointed a new president.
The bond proceeds will fund renovations to undergraduate housing and a Harvard Medical school administrative building, as well as construction of Harvard affiliate housing at the university’s Allston campus. The university will also use the proceeds to refund bonds the Massachusetts Development Finance Agency sold on its in 2016.
The issuance follows a series of major sales by Ivy League schools. Both Princeton and Cornell have sold hundreds of millions of dollars worth of bonds this year. Harvard sold $750 million in taxable bonds last month.
The tax-exempt bonds are special obligations of the agency, payable by Harvard revenue. Harvard recorded $6.1 billion in operating revenue last fiscal year, a 5% increase over the year prior, according to the official statement accompanying the sale of the bonds.
Goldman Sachs & Co LLC served as lead underwriter on the issuance, purchasing the bonds for $852.6 million. The price reflected a premium of $120 million and a discount of $2.5 million.