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  1. Wealth
October 11, 2012

Cambridge University Issues Its First Public Bond Is This the Start of a Trend for British Universities?

By Spear's

For the first time ever, Cambridge University has decided to raise money through public bond markets by issuing a 40-year, ’350m bond to fund a new laboratory.

For the first time ever, Cambridge University has decided to raise money through public bond markets by issuing a 40-year, £350m bond to fund a new laboratory.

With an AAA rating, it enjoys a better credit rating than the UK government, and Cambridge took orders totalling £1.5bn yesterday, eventually having to turn eager investors away.

It follows De Montfort, which issued a £110m, 30-year bond in July — suggesting that this method of raising funds could become more popular for British universities. It’s already common practice among US universities, including Ivy Leage institutions like Harvard and Yale.

That Universities should need to find new funding sources at all might seem surprising to some — after all top university fees have increased from £3,375 to £9000. But as Spear’s reported earlier this year, even leading universities like Oxford wouldn’t be able to survive without philanthropy — this year there’s a £77 million shortfall in its undergraduate current account.

It’s an alarming thought. The UK’s education system is world-renowned, but it is dangerously cash-strapped. Undoubtedly if UK universities are to retain their global reputations, they need to find new sources of funding — but no foray into capital markets is without risk, and when it comes to one of Britain’s finest educational institutions, there is a lot at stake.

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