Moody’s cited Princeton’s “exceptional student market position” and “robust financial resources” in affirming its Aaa rank.
AAA Edge
About $150 million from today’s deal will refinance debt, with the rest to be used for constructing and renovating buildings such as Firestone Library, the Lewis Center for the Arts and dormitories, according to Mbugua and offering documents.
It’s the school’s first tax-free bond sale since 2011, according to Bloomberg data.
The university’s top bond grades may buffer it from record withdrawals in the $3.7 trillion municipal market. Individuals have pulled money from muni mutual funds for 32 straight weeks, the most since at least 1992, Lipper US Fund Flows data show.
AAA bonds have weathered the wave better than the rest of the market. Over the past 12 months, such debt has lost 1.3 percent, compared with the entire market’s 2.7 percent decline, Bank of America Merrill Lynch data show.
Bonds Outperform
Some Princeton debt has outperformed benchmark munis.
Tax-exempt debt issued by the New Jersey educational agency for the university and maturing in July 2020 traded with an average yield about 0.08 percentage point above top-grade munis during the past five months, data compiled by Bloomberg show. That compares with an average spread of about 0.28 percentage point in the prior five months.
“If there’s a better credit out there than Princeton University, I’m not sure who they are,” said Hugh McGuirk, Baltimore-based head of municipal investments at T. Rowe Price Group Inc., which oversees about $20 billion of local debt. The company owns some of the school’s debt in its New Jersey fund, he said.