Williams College, the liberal arts school sprawled across 450 acres of the Berkshire highlands in Massachusetts, is out to show municipal bond investors the greater value of some higher education debt.
The alma mater of former President James Garfield and current U.S. Rugby Olympian Kristi Kirshe plans to sell $108 million of bonds next week to help fund a new art museum and a multipurpose recreation center, according to bond documents. The Massachusetts Development Finance Agency will serve as issuer and Goldman Sachs Group Inc. as lead underwriter.
At least 50 universities and colleges have flooded the market this year with more than $10 billion in securities to address project funding and refinancing needs, according to data compiled by Bloomberg. That’s more than double the amount for the same period in 2023.
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While the new bond sales have generally met with torrid demand, the higher education sector of the market has had its share of bad news in recent years. Some smaller private colleges nationwide have had to shut down, overwhelmed by their debt load amid a decline in enrollment.
Just this summer, Clarks Summit University in Pennsylvania shuttered after enrollment dropped by about half since 2012. Eastern Nazarene College, a small Christian college near Boston, closed its doors amid ongoing financial woes.
Elite schools like Williams have no trouble finding investors, said Daniel Solender, portfolio manager at Lord Abbett & Co. Demand has been solid as colleges hurry to complete financings before the arrival of any potential market volatility from the US Presidential Election in November.
“The market’s very accepting of new issuance as issuers try to get their financings done before the election,” according to Solender.
The bonds will also be used to reimburse costs of construction of the Davis Center, which officially opened in April. The complex is a multicultural center, operating as a hub of programs and spaces for underrepresented communities within the student body.
The college is starting to see interest from prospective students surge. Williams received 15,411 applications from first-year hopefuls so far this year, compared to 11,465 from the year prior, according to the bond documents.
Moody’s Ratings assigned Williams an Aa1 rating, the company’s second highest, citing its “track record of superior fundraising and student demand.”
“Improved operating margins, with two consecutive years of Moody’s-adjusted operating surpluses and EBIDA margins over 20% after multiple years of deficits, demonstrate management’s strengthened ability to manage expenses,” wrote lead higher education analyst
Representatives from Williams College declined to comment.