With an Aa1 credit rating (out of Aaa) reaffirmed by Moody's Investors Service only the day before, Cornell's $500 million in taxable bonds were snapped up by investors March 26 in less than 30 minutes.
A stable outlook for the university was also registered by Standard and Poor's, despite its slight downgrading of the bonds to a AA rating, according to Vice President for Finance Joanne M. DeStefano. "There was significant investor interest which allowed us to tighten up pricing and successfully execute all the bonds."
The Cornell Board of Trustees authorized the bond issue March 6 to provide the university with working capital and institutional liquidity. President David J. Skorton said in a March 6 statement: "This approach -- which is similar, though more modest in size, to that being utilized by other large universities -- will alleviate pressure on the endowment and other sources of funding as may be necessary over the next several years to meet operating shortfalls and other potential liquidity needs."
On the day of the sale, Standard and Poor's downgraded Cornell one notch, to AA from AA+ (the agency's highest rating is AAA). The downgrade was due to "structural deficits and significant debt," according to Ana Sandoval, a Standard and Poor's spokesperson. Nonetheless, an AA rating is still considered "very strong," said Patricia Johnson, associate vice president for finance and university treasurer. "Standard and Poor's felt that we are well positioned to come out of any problems once the market improves."
During the week of March 30, the university will also offer up to $305 million in tax-exempt bonds, a type of bond that Cornell issues every two years, Johnson said. That money will be used for capital projects already in progress.