December 1, 2017 / 4:04 PM / 11 days ago

Oxford makes century bond debut

LONDON, Dec 1 (IFR) - The University of Oxford sold its first ever bond on Friday, coming to market with a rare £750m ultra-long 100-year that saw investors pour in orders of over £2.8bn.

Oxford obtained a Triple A rating by Moody’s just days before an investor roadshow began on November 29 via JP Morgan.

Oxford follows in the footsteps of several other British universities issuing bonds in recent years against a backdrop of reduced government funding.

Moody’s said the top rating “reflects its extraordinary market position as one of the world’s elite universities, ensuring consistent student demand and wide-ranging support from the government, donors, and research funding bodies.”

The deal printed at 85bp over the July 2068 Gilt, 25bp inside the tight end of the IPT range, although estimating fair value proved tricky.

One investor pointed to Cambridge University and EDF as reference points.

The former’s Aaa rated £350m 40-year came at 60bp over Gilts in 2012 and is now at 43bp, while the latter has a £1.35bn century bond that priced at Gilts plus 261.5bp in January 2014 and is now bid around 263bp. EDF, rated A3/A-, also has a 40-year due September 2050 at around Gilts plus 193bp.

He estimated fair value for Oxford at around 90bp and suspected pension funds constituted the bulk of orders for the offering.

Another investor highlighted that the deal might be the last big sterling issue of the year.

“This is a very nice deal with a rare maturity from a high-quality issuer. It’s a museum bond - the type that you buy and lock away.”

DEAL STEPS

* Final terms: £750m at G+85. Books £2.8bn+. ISIN XS1713474838. JPM is B&D. Allocs and pricing to follow. (12:21pm)

* Books £2bn+ and subject at 11:15am. Guidance G+90/+95 for £500m-750m deal. (10:41am)

* IPTs UKT3.5% Jul 2068 +110/+115, benchmark size, pricing today. Due 8 Dec 2117, pay 8 Dec, standalone docs, English law, London listing, 100k/1k denoms, Reg S bearer. UoP: GCP. (8:36am)

Oxford University, rated Aaa (stable) by Moody’s has appointed JP Morgan to arrange a series of fixed income investor meetings in the UK commencing Wednesday November 29. A debut benchmark ultra long dated senior unsecured sterling denominated Reg S bearer transaction may follow, subject to market conditions. Relevant stabilisation regulations including FCA/ICMA will apply. Roadshow schedule: Wednesday November 29 - London 1x1s and group lunch (1pm @ Brewers’ Hall); Thursday November 30 - Edinburgh group lunch (12:30pm @ The Balmoral + (Global Inv Call time and 1x1s TBD, subject to demand). (Nov 28) (Reporting by Pauline Renaud, editing by Alex Chambers, Julian Baker)

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