Image Credit: Aivin Gast
Oxford University has tapped its £750 million 100-year bond for a further £250 million, raising almost £1 billion in sterling bonds due in 2117. The University issued bonds for the first time in 2017, raising £750 million from global investors, marking the biggest amount raised from the capital markets by a UK university in recent years.
The issuing means that Oxford will receive funding from investors, and will repay said contributors after 100 years. Interest rates were set at 2.54% in 2017, but this rate was dropped to 2% follow- ing consistency in the University’s global reputation and the potential for more international students attending the University as a result of a weaker pound.
The BBC reported in 2017 that the University intended to use the money raised from bonds to improve facilities, but a media statement released by the University’s News Office this month states that “the cash raised will be used for General Corporate Purposes”. Oxford plans to invest around £1.5 billion in building projects over the next 10-15 years.
Professor Louise Richardson, University Vice-Chancellor, commented: “Oxford University is grateful for the continued support of investors and is delighted by the outcome of the issue which will be used in pursuit of academic excellence.” It is generally understood that uncertainties surrounding higher education funding and threats to EU-wide research projects in the wake of Brexit are major reasons behind this move. Richardson told BBC Radio in 2017 that despite Oxford being ranked the top university globally by Times Higher Education, the University is “really quite worried” about Brexit driving away academics, researchers and students.
Reuters reports that Oxford receives around £67 million a year from the European Research Council, and there is no reassurance from the UK government that this funding will be replaced after Britain exits the European Union. Multiple institutions in the UK preceded Oxford in seeking funding from bonds. Colleges have also previously issued bonds independently, and in 2012 Cambridge University raised £350 million from a 40-year bond. Cardiff and Bristol universities raised money in the same decade, following a 2010 report from the Russell Group which concluded that bonds are a viable way to finance higher education.
The bond sale raises questions about the gap between richer universities capable of raising funds from investment markets and other institutions. Oxford currently has an endowment of more than £2 billion, and 40% of its profit comes from Oxford University Press.
With assistance from JP Morgan, the bond’s predicted stability is likely to attract pension funds and other institutions looking for long-term investment.
