Durham may take bond route to fund capital projects

Durham University could become the latest UK university to raise money for capital investments by issuing a bond.

The University of Cambridge and De Montfort University agreed last year to use the financial instrument to support their expansion plans, against a background of heavily cut public funding for building projects.

Minutes from a meeting of Durham’s council on 19 March reveal that the university’s finance and general purposes committee had given approval to “commence the process of obtaining a bond rating”.

It states that the committee had been presented with a number of ways to fund an “ambitious” programme of improvements to residential accommodation while maintaining a £20 million “capital investment capacity”.

De Montfort announced in July last year that it would issue a £110 million bond, and at the time Dominic Shellard, the vice-chancellor, said that he had been “besieged” by other universities considering the same course of action.

Cambridge followed in October, issuing bonds to raise £350 million to build housing and research facilities in the north-west of the city.

The institutions were the first to issue public bonds since the University of Greenwich in 1998, and both won approval from the Higher Education Funding Council for England to do so.

Public funding for new buildings has been cut severely in recent years, falling by almost two-thirds from 2008-11 to 2011-12.

Cambridge received the highest possible creditworthiness score – AAA – from the ratings agency Moody’s, while De Montfort was given AA1, one level lower.

In a statement, Paulina Lubacz, Durham’s treasurer and acting registrar, said: “No decision has been taken about our future investment programme or how it might be financed.”

She added: “We are exploring a range of options and no timescale has been set for a decision.”

david.matthews@tsleducation.com