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December 18, 2017

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Oxford university’s bond success sparks interest

THE success of Oxford University’s US$1 billion bond, the first in its 1,000-year history, is good news for Britain’s top academic institutions at a time of anxiety over Brexit-related funding shortfalls and calls to scrap student tuition fees.

The 100-year bond, launched on December 1 with a 2.5 percent coupon, has taken the market for deals for UK universities and colleges to a new level on a par with such big US names as Harvard and Yale.

Technically, the bond was the biggest from any university in the world. Buying interest equaled US$2 billion or double its face value.

The day after its launch, it was among the top 20 rated issues in the whole of Europe, according to Trax, a subsidiary of debt trading platform MarketAxess.

That is cause for celebration for peers contemplating bond sales, even if their credit scores are less impressive than Oxford’s gold-plated triple-A rating. The oldest university in the English-speaking world, Oxford topped a global ranking by the Times newspaper for the first time last year.

It’s an uncertain time for Britain’s academic institutions.

The cost of student tuition fees, which make up almost half of UK universities’ revenues, has been catapulted to the top of the political agenda by young voters who deserted Britain’s ruling Conservative party in a snap election in June.

Universities expect these fees — currently 9,250 pounds (US$12,424) a year — to be reviewed in the new year, meaning they are unlikely to rise further and could even be cut.

“I think the whole higher education sector is worried about the debate around tuition fees,” Oxford’s Pro-Vice-Chancellor for planning and resources, David Prout, said after the bond sale earlier this month.

Britain’s plan to leave the European Union in March 2019 is also weighing heavily.

UK universities are already finding it harder to attract and retain EU-born students and staff.


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