American colleges and universities raise funds by issuing bonds. In the first half of the year, more than $27 billion was raised in this manner.
But, according to data compiled by Pensions & Investments, Howard University is the only historically Black college or university to tap the bond market. Howard raised $147 million earlier this year and recently announced plans for more than $200 million in debt.
The timing of Howard’s bond sale during a national reckoning on racial inequality may draw more demand and new buyers to the deal. The heightened focus on such issues may lure in more buyers than normal and help push down the interest rate that Howard has to pay, according to the report.
For lower-rated issuers, it costs more to borrow because investors require higher yields to make up for owning riskier bonds. Howard’s debt is rated just one step above junk bond status.
