THE
ISSUE NO. 760
08
07
News: Varsity talks to Julian Huppert, MP for Cambridge
News: Why do so few girls choose science subjects?
INDEPENDEN T
28
Fashion: Tom Rasmussen gets the custard out for this week’s shoot
30
Sport: Hockey heartbreak after own-goal mishap: almost a golden fortnight
SIN C E
1947
VARSITY.CO.UK
Cambridge puts itself up for sale
CLAIRE COTTERIL
Overwhelming demand from investors for University’s first bond issue NEWS REPORTER
08
NEWSPAPER
FRIDAY 12TH OCTOBER 2012
GRISHMA SHANBHAG
Interview: Princess Basma Bint Saud on reform for women’s rights
ST UDEN T
For the first time since its inception in 1209, Cambridge University has decided to tap the public bond market instead of the pockets of wealthy benefactors to fund its latest development plans. On Wednesday the University announced its £350 million issue of 40-year bonds. Net proceeds will be applied towards research facilities, accommodation and other assets including a potential site in northwest Cambridge with 1,500 housing units and 100,000 square metres of research space. The University has had to turn away many potential investors after receiving a surplus of offers totalling over £1.5bn on Tuesday. The 40-year term to maturity will enable the University to tap into the longer investment horizons afforded by insurance and pensions funds, who in particular have shown a growing interest to invest in national universities. Moody’s assignment of the top Aaa (stable outlook) rating to the bonds last week has fuelled demand from investors seeking to invest in top-rated securities offering a premium over sovereign paper. The rating is said to be indicative of the university’s “outstanding market position, significant amount of liquid assets and strong governance structure”. Cambridge’s strong cash flows and stable revenues from its printing and assessment businesses, fund research facilities and endowments have enabled it to fund capital projects without debt so far, and the central institution commands around £2.6bn in net assets. The University’s highly transparent governance structure and strong regulatory
framework under the Higher Education Funding Council for England has also been commended. The stable outlook reflects the importance of the institution to the national economy and limited reliance on government funding compared to its peers. In amusing contrast the UK itself is rated Aaa with a negative outlook, signalling Moody’s inclination to lower its rating. Commenting on the interest garnered, Professor Sir Leszek Borysiewicz, Vice-Chancellor of the University of Cambridge, said: “we are delighted by the success of this issue, and by the strong support shown by investors in the University and its mission. The proceeds will enable us to continue to invest in teaching and research at the highest international levels.” The issuance marks a shift from the University’s traditional reliance on philanthropy as a source of income. Launched in 2005 as “the most ambitious educational fundraising initiative in Europe”, the Cambridge 800th Anniversary Campaign raised an astounding £1.2 billion. However, the recent sharp fall in average yields on corporate debt caused by worldwide central bank activity has provided an opportune environment for the University to make its bond market debut. Despite the rise in the tuition fees cap from £3,375 to £9,000, direct subsidies for facility upgrades have been reduced under the higher education reforms and banks are increasingly reluctant to engage in long term lending. Capital markets offer an alternative for institutions wishing to secure certainty over their long-term financing and reduce their reliance on taxpayers amid public sector budget cuts. Continued on page 4
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News, p.11
Features, p.14
Theatre, p.26
Comment, p.13
Magazine, p.20