Trent U issues first debenture to refinance debt

Peterborough, ON, Canada / (CHEXTV)

Calling it a “trailblazing move for smaller universities,” Trent University Monday announced it has issued $71 million in debentures to help refinance debt and fund capital project.

The university was rated “stable” by Dominion Bond Rating Service, based on Trent’s “reputation as an important, primarily undergraduate and liberal arts institution” with increasing enrollment. The debenture offering was approved by the University’s Board of Governors at its February 3, 2017 meeting.

“The inaugural debenture offering is a sign of the strength of our Board’s financial stewardship,” says university president and vice-chancellor Leo Groarke. “This is a groundbreaking move for smaller universities. It shows that we can, like larger universities, take advantage of the Canadian bond market and the financial advantages it provides without a discount.”

The “A” (stable) rating and decision to issue debentures comes as Trent ranked as the number one undergraduate university in the province for the sixth year in a row, experienced two years of enrollment growth and leads the province for percentage increase in applications yet again for fall 2017.

The debentures will have a term of 40 years, with the following benefits:

  • locks in a lower effective cost of capital; and
  • eliminates interest rate and refinancing risk over the term

Trent University’s vice-president, Finance and Administration led the effort to arrange the inaugural offering.

The university says that refinancing debt will save money through the replacement of current fixed amortizing loans with a non-amortizing debenture.

 

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