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MIT sells $500 million in taxable century bonds

Proceeds will support long-term campus renewal and development under the MIT 2030 framework.
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Earlier today, MIT sold $500 million in Series E Taxable Bonds, maturing in 2116 and yielding 3.885 percent. This yield marks an all-time low for the costs of a 100-year bond. The proceeds from these bonds will be used to further advance MIT’s ongoing campus renewal and development program, including academic and research capital projects within the MIT 2030 framework.

Bond financing is a type of long-term borrowing frequently used to raise money for long-lived infrastructure assets. Investors purchase the bonds from the issuer, in this case MIT, which commits to make periodic interest payments and repay the original principal on a certain date. MIT’s “century bonds” are set to mature 100 years from now. Investors typically include individuals as well as pension plans, mutual funds, and insurers.

MIT 2030 is a framework for guiding the physical development and renewal of MIT’s campus and its surrounding innovation district in support of MIT’s mission. The proceeds from these bonds, combined with gifts and internal funding sources, will enable the continued acceleration of the campus renewal program as well as other strategic research buildings and infrastructure projects over the next decade.

MIT views this issuance as well aligned with the long time horizon of MIT’s strategic investments, while also locking in a historically low cost of capital for a very long period of time. The bonds were rated Aaa and AAA, respectively, by independent credit rating agencies Moody’s Investors Service and Standard & Poor’s Ratings Services. These ratings — accompanied by a reaffirmation of MIT’s credit as Aaa/AAA grade, with a stable outlook — are supported by the Institute’s status as a pre-eminent research institution with exceptional student demand and a record of strong financial stewardship.

Series E notes are unsecured general obligations of the Institute and are callable prior to their scheduled maturity through a “make-whole” provision.

JP Morgan led the financing, with Barclays Capital serving as joint bookrunner.

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