A Financial First

The University of Toronto issued $160 million in long-term debentures in July, becoming the first Canadian university to raise a sum this size in broad-based capital markets financing. A large portion of the funds will be used to finance new residences for the double cohort of Ontario students arriving in 2003 due to the elimination of Grade 13.

The debentures were issued by private placement (CIBC World Markets, Merrill Lynch, and RBC Dominion Securities) and sold out immediately. Earlier this year, U of T received top credit ratings from two agencies: Aa2 from Moody’s Canada Inc. and AA+ from Standard and Poor’s.“A debenture offering is a cheaper and more efficient borrowing method – the university can borrow the funds all at once at a better rate,” says Sheila Brown, acting chief financial officer. “By keeping our borrowing costs low, we can make an effort to pass he savings along in our residence rates.”