UC philanthropic bond issue gets positive response
UC philanthropic bond issue attracts positive response
In its first 10 days the University of Canterbury’s philanthropic bond issue has attracted investments in excess of $15 million.
The offer, which opened on 9 October and closes on 30 November, is for $50 million of fixed rate bonds with the ability to accept oversubscriptions of a further $50 million.
Vice-Chancellor Dr Rod Carr says he is delighted with the positive response from investors.
“This reflects the willingness of New Zealanders to put their savings to work in New Zealand for New Zealand. The bond’s fair rate, flexible options and the University’s clear strategy are proving attractive to investors.”
Murray & Company and First NZ Capital, Joint Lead Managers of the issue, say they have accepted reservation requests from NZX firms in excess of $35 million.
The University is planning on investing as much as $500 million in capital projects in the next 10 years. Funds raised through the bond issue will allow the University to accelerate its plans for developments such as building refurbishments, new buildings, ICT infrastructure and alternative technologies.
Dr Carr says the proposed capital developments are necessary to ensure the University of Canterbury can provide New Zealanders access to a truly world-class tertiary education in their home country.
Investors in the bond issue will be paid 7.25 per cent interest for five years, with the rate then reset for a further five years, and be entitled to full repayment when the bonds reach maturity in 2019.
Dr Carr says the bond’s philanthropic options are a first for New Zealand.
"We will offer investors the option of reducing the interest to zero for some or all of their bonds – a decision that they can change should their circumstances change.
“During the term of the bond we will also invite investors to consider donating part, or all, of the sum owed on maturity. We will continue to pay the investor interest on bond principal they have donated if they so elect," Dr Carr says.
"This philanthropic element of the bond issue is optional, but will allow investors to direct their support to higher education while tailoring their contribution in light of their own circumstances which may change over the term of the bond.”
Subject to their taxable status, the Bondholder may be entitled to a tax credit or deduction on the donation of principal.
No money will be received until investors have a copy of the investment statement.