Wesleyan University has issued $250 million of 100-year, fixed-rate taxable bonds, refinancing the majority of its existing debt. University officials said the current market for “century” bonds offers a historically unique opportunity to obtain long-term debt at favorable rates (4.781 percent).
Over the last 30 years, bond rates have been below this point less than 2 percent of the time. Wesleyan is the first educational institution in over a year to successfully issue a century bond.
After refinancing the existing debt, the remainder of the proceeds will be invested alongside the endowment for future needs. The university has not made any commitments to specific projects. The sale also acts as an inflation hedge with a fixed interest rate for 100 years, and will help manage the university’s debt service costs. The bonds are payable in 2116.
“This is a move toward solidifying our economic future,” said President Michael Roth. “We have no immediate plans to spend these funds, but rather are restructuring our debt to ensure greater security and flexibility in years to come.”
“It is gratifying to see the high level of interest among investors in Wesleyan’s bond sale, signaling their confidence in Wesleyan’s future and fiscal sustainability,” said John Meerts, vice president for finance and administration.
The sale was approved by Wesleyan’s Board of Trustees.
Wesleyan’s excellent credit rating from Moody’s (Aa3) and S&P (AA stable) will not be affected by the bond sale.
Other schools have successfully issued 100-year bonds in recent years, including Hamilton College, Tufts University, Bowdoin College, the California Institute of Technology, and the Massachusetts Institute of Technology.