by Barbara Black

Concordia has sold $200 million in bonds to finance its ambitious construction program.

It is the first bond issue by a university in Quebec and only the fifth in Canada. However, this is a growing trend, as Canadian universities look to the private sector to supplement the financial support given by government.

The first to do so was the University of Toronto in 2001, with an offering of $160 million. They were followed by the University of British Columbia, York and Brock. At least six more offerings by Canadian universities are expected, including McGill and another offering by U of T. However, Concordia’s offering is the largest to date by a Canadian university.

The university was assigned a credit rating of A1 from Moody’s Investors Services and A from Dominion Bond Rating Service, the same ratings given to the province of Quebec. This attests to the sound financial management of the university as well as its positive outlook for the future.
Concordia’s offering was of Series A debentures, with interest of 6.55 per cent paid semi-annually; the minimum subscription was $150,000. The bonds were sold to 23 purchasers, mainly pension funds.

These bonds are distinct from the “grant bonds” used by the Quebec government since 1969 to finance capital spending in education, health and the social services. Those bonds are managed, administered and serviced by the government of Quebec. In this case, however, the bonds are direct obligations of the university.

Concordia is in the midst of an extraordinary construction period (See Buildings, page 2). The estimated cost of the three new buildings will be about $351 million, of which $200 million will come from the bonds, $100 million from private fundraising and the rest from government.