Debenture Offering

University receives "A" rating with a stable trend based on reputation and enrollment

In a trailblazing move for smaller universities, Trent University issued its first-ever debenture to investors to effectively refinance debt for considerable savings.

The University issued and priced by way of private placement, $71 million in senior unsecured A debentures to refinance existing debt and provide funds for capital projects. Trent University received an “A” (stable) rating from Dominion Bond Rating Service (DBRS) 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. 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,” said Dr. Leo Groarke, president and vice-chancellor of Trent University. “Trent’s “A” (stable) credit rating is a strong signal that Trent is performing well on the key measures that influence the market.”

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, who led the effort to arrange the inaugural offering, commented: “This is a sound way for the University to manage debt and finance capital projects. It’s a coming of age for Trent and provides much greater flexibility that will allow the institution to take advantage of the momentum we are gaining in enrollment and reputation.”

Refinancing the University’s debt will achieve cost savings through the replacement of current fixed amortizing loans with a non-amortizing debenture.