Cambridge University issues groundbreaking £600m bond
The University of Cambridge is issuing a pioneering bond linked to the consumer prices index (CPI).
The venerable university, which has a higher credit rating than the UK government, is selling a £600m bond to raise money for investment in its facilities.
The bond is notable as it is uses the CPI, rather than the retail prices index (RPI) as a measure of inflation.
The RPI is the most commonly used inflation benchmark, but there have been calls for its use to be stopped since 2012 when the Office for National Statistics found it exaggerated the rate of inflation.
Read more: Oxford University turns to the debt market aiming to raise £250m
One banker said the Cambridge bond could be a key moment in the adoption of CPI as the inflation measure of choice.
“This could be the turning point, it could be the deal which gives people the confidence they need to understand that there is a demand and there is a market out there for it and it prices in a way that is attractive for investors and issuers”, they said.
Read more: CPPIB becomes world's first pension fund to issue green bonds
Cambridge previously sold a £350m bond with a 40 year maturity in 2012, while in December Oxford University sold a 100-year bond raising £750m.
Morgan Stanley, Barclays and HSBC are the banks acting as bookrunners on the issuance.
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