Posted on Oct. 24: Strong academic niche, research profile contributes to successful bond issue

McMaster University has successfully completed its first-ever capital financing bond issue.

The $120-million bond issue is part of a capital financing strategy approved by the Board of Governors to provide financing for the $262-million in approved expansion projects such as new lecture halls, labs and research space.

The successful private debt placement follows on the heels of the University acquiring its first credit rating – an AA rating – that matches the Province of Ontario's credit rating.

The capital financing strategy supports the University's planning process for future growth and ensures stability in the financial planning process. The 50-year bonds have an interest rate of 6.15 per cent.

“The success of this private debt placement speaks to the confidence that the business sector has in McMaster University,” said Karen Belaire, vice-president administration.

“Securing financing at a fixed rate for 50 years provides us with stability for future planning. Many individuals participated in this project and worked very hard to ensure the successful completion of the bond issue and I would like to thank everyone for their efforts.”

University President Peter George said the bold capital financing plan is part of McMaster's continued success in applying innovative strategies to achieve its academic mission and vision.

“The outstanding credit rating and successful bond issue clearly signal that McMaster is one of the best managed and most promising universities in the country,” said President George.

The Board of Governors approved the financing strategy at its June meeting. The University was then required to obtain a credit rating. This process began with the senior team making presentations to the bond rating agencies. On Sept. 9, Standard & Poor's Ratings Services and Dominion Bond Rating Services assigned the University a double A (AA) stable rating.

“The ratings on McMaster reflect a very strong demand profile for the university in the medium term; a manageable debt burden; strengthened financial support from the Province of Ontario and per-student endowment and unrestricted financial resource values that are higher than many Canadian peers,” said Standard and Poors credit rating agency.

Standard & Poor's also said the University's “prudent management approach” to facilities and financial planning and “strong academic niche and research profile” contributed to the excellent credit rating.