Bloomberg News

Yale to Sell $100 Million of Munis With Yields at 15-Month High

June 17, 2013

Yale University, the second-wealthiest U.S. college, is planning a $100 million tax-exempt bond sale with municipal yields near the highest in 15 months.

The New Haven, Connecticut, school will use the proceeds to refinance debt issued in 2003 to pay for construction and renovation. The variable-rate bonds will be issued through the Connecticut Health and Educational Facilities Authority. Moody’s rates the securities Aaa, its top grade.

Yale, ranked No. 3 by U.S. News and World Report among national universities, will issue the debt as the $3.7 trillion muni market is in its longest slump since 2011.

The interest rate on benchmark munis maturing in 10 years was about 2.34 percent as of 9 a.m. in New York, data compiled by Bloomberg show. That’s near the highest since March 2012. Tax-free debt has lost 1.5 percent this month after a 1.3 percent drop in May, on pace for the first two-month losing streak since 2011, Bank of America Merrill Lynch data show.

“The university continues to benefit from advantageous interest-rate conditions through its substantial variable-rate debt program, but has hedged a significant portion of its exposure to higher interest expense with interest-rate swaps,” according to offering documents. The school has about $1.3 billion of such swaps outstanding.

Yale has $3.4 billion of Moody’s-rated debt outstanding, according to a report from the company. It had a $19.3 billion endowment, second only to Harvard University.

The school, which has alumni including former President George W. Bush and Nobel Prize-winning economist Paul Krugman, had a 7 percent acceptance rate for the previous academic year.

The top credit grade reflects “its globally recognized position as a leader in education and research, as demonstrated by extraordinary student demand and superior philanthropic support,” Moody’s said.

To contact the reporter on this story: Brian Chappatta in New York at

To contact the editor responsible for this story: Stephen Merelman at

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