October 5, 2016 / 7:32 PM / a year ago

UPDATE 1-Harvard University bond yields shaved in repricing

(Adds refunding details, comment from university spokesman)

By Karen Pierog

Oct 5 (Reuters) - Yields on $1.548 billion of Harvard University revenue bonds fell mostly by 2 to 3 basis points when the debt was repriced on Wednesday.

The top yield was shaved by two basis points to 2.73 percent for bonds due in 2040 with a 5 percent coupon. Even though the bonds are rated AAA, that final yield was 43 basis points over Municipal Market Data’s triple-A yield scale due to a make-whole call provision, according to MMD.

The 1.60 percent yield on bonds due in 2026 was 8 basis points over the scale.

The bonds were issued through the Massachusetts Development Finance Authority and initially priced by underwriters led by Goldman, Sachs & Co on Wednesday and then repriced to reflect investor demand.

The university refunded bonds it had sold in 2008, 2009 and 2010, according to the preliminary official statement. The 2008 tax-exempt bonds were sold in a single 2038 maturity with a 4.49 percent yield and 5 percent coupon in the wake of the financial market meltdown.

“Harvard is issuing $2.5 billion of bonds to refinance existing debt to take advantage of the current low interest rate environment,” university spokesman David Cameron said in an email. “Harvard has been reducing debt in recent years, and this refinancing will continue the trend of lowering the university’s interest expense.”

Harvard plans to sell about $1 billion of taxable bonds as soon as Thursday, Cameron added. (Reporting By Karen Pierog; Editing by Daniel Bases and Richard Chang)

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