Columbia University is expected to tap investors to borrow $500 million of debt, joining a boom of elite colleges that have issued in the capital markets this year.
The Ivy League university is poised to sell both tax-exempt and taxable securities this week to raise money for projects across its campus in Manhattan. A portion of the bond proceeds will be used to pay for improvements to multiple dorms, the addition of chemistry and quantum physics lab-space in academic buildings, furnishing the law school’s library and upgrades to the college’s medical center campus.
The deal marks one of the latest debt offerings from a US college, which have surged this year as the direction of interest rates stabilized and investor demand increased. Universities broadly have sold $24 billion of municipal debt so far in 2024, with sales from Ivy League schools climbing to nearly $3 billion, an increase of more than 650% from the same period a year ago, according to data compiled by Bloomberg.
Cornell University, Princeton University and Harvard University have all sold bonds this year, joining flagship public schools like the University of California or Texas A&M University as well as liberal-arts institutions like Williams College. Even elite colleges are in a frenzied race for students, determined to bring the best and the brightest to campus, lured in by new dorms and state-of- the-art academic buildings.
Columbia’s demand profile is incredibly strong, with more than 60,000 students applying for admission for the fall 2024 first-year class. Of those, just 2,300 were accepted, representing an admission rate of 3.9%, according to bond documents.
It also boasts an endowment of nearly $15 billion, making it one of the wealthiest universities in the US. Those two factors contribute heavily to its top-tier credit rating from both Moody’s Ratings and S&P Global Ratings.
The school’s rating “is supported by its prestigious reputation, substantial wealth and scale, and manageable financial leverage,” according to a Moody’s report dated Sept. 26. “Its exceptional brand and strategic positioning continues to incorporate its superior demand, excellent donor support, and expansive research enterprise.”
Columbia University was enmeshed in controversy this year after campus protests over the war in Gaza. The school faced national attention when the New York Police Department clashed with protesters earlier this year. The school canceled its main graduation event and the president at the time, Minouche Shafik, resigned before fall classes started.
A spokesperson for Columbia University declined to comment about the bond sale.
The deal is expected to price on Oct. 2, according to investor roadshow documents. The $150 million tax-exempt portion will be issued through the Dormitory Authority of the State of New York. Bank of America Corp. is serving as senior managing underwriter. The $350 million of taxable bonds will be led by Goldman Sachs Group, Inc
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