Howard Blazes Trail For Black Colleges on Market’s Sideline

Howard University showed that the nation’s historically Black colleges can easily tap into the bond-sales boom if they want to.

Barclays Plc, the senior manager of the school’s debt sale Wednesday, said it received about $837 million of orders for the $209 million bonds, four times as many as were available. The 22 bidders included bond funds, asset managers and insurance companies, Barclays said.

“We had a tremendous response from investors; it was just really something,” said John Augustine, a managing director at Barclays who runs the bank’s higher education, academic medical center and not-for-profit finance group.

With Wednesday’s sale, Howard became the first historically Black college to join the unprecedented borrowing binge by universities that has swept U.S. markets since the recession sent interest rates dropping, giving them a big incentive to refinance debt or raise needed cash. Higher education institutions have sold more than $27 billion of bonds this year, though aside from another deal from Howard in February, predominately Black schools -- which tend to have smaller endowments and more lower-income students -- have sat it out.

Ten-year bonds due on Oct. 1, 2030 were sold at a 2.801% yield, or 215 basis points more than comparable Treasuries. Spreads on the deal were revised downward between 2 basis points and 10 basis points from those initially offered due to interest in the deal, according to Barclays.

©2020 Bloomberg L.P.

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