Yale weighs $850 mn bond sale amid Trump's attack on higher education

By Elizabeth Rembert and Amanda Albright

 

Yale University is considering selling $850 million of bonds in May, joining other elite colleges that have looked to the capital markets to raise funding as the Trump administration targets the institutions. 

The sale would consist of two bond series: one offering $500 million of tax-exempt bonds and another selling $350 million of taxable bonds, both are expected to price the week of May 5, the school said in a notice to investors dated Wednesday.

 

The tax-exempt bonds may be structured as fixed-rate put bonds with one or more mandatory tender dates at least three years from issuance, the filing said. Proceeds will go toward facility needs and appear to reflect long-standing plans. In January, S&P Global Ratings said in a report that Yale was planning to issue as much as $500 million in additional debt by June. 

 

The taxable bonds may be structured with an index-eligible par amount in a benchmark maturity, including, but not limited to, a 7-year or 10-year maturity. Those proceeds will be used for general purposes. 

 

The notice doesn’t address federal funding uncertainty, but the timing comes as Yale faces a warning from the US Department of Education’s Office for Civil Rights, which has threatened enforcement actions if the school fails to protect Jewish students from antisemitic discrimination and harassment. Sixty universities received letters.

 

Other Ivy League institutions have also turned to the taxable bond market this spring, drawn by easier access and fewer regulatory hurdles. Harvard and Princeton have both sold bonds in recent months, and Brown University recently entered into a $300 million loan. Some schools are moving to shore up liquidity amid potential threats to federal support.

 

A spokesperson for Yale didn’t respond to a request for comment.  

 

The University of Pennsylvania and Stanford University are among other elite schools that have recently tapped debt markets as risks around taxes and funding persist.

 

Yale has top-tier credit ratings from Moody’s Ratings and S&P Global Ratings, bolstered by its more than $41 billion endowment and strong brand. 

 

“Credit challenges include a moderately high reliance on endowment earnings for operations, which can pressure the university’s fiscal operations in the event of prolonged market weakness, and moderate exposure to potentially volatile clinical revenue,” analysts at Moody’s Ratings warned in a May 2024 report. “An effective risk management framework and exceptional financial strategy provide some offset to these challenges.”

 

The upcoming transaction will be managed by Barclays, the filing said.