By Michael McDonald and Jeremy R. Cooke
Jan. 12 (Bloomberg) — Harvard University, which has almost
doubled its debt burden in three years, begins selling about
$400 million of tax-exempt bonds today as it finances part of a
scaled-back campus expansion plan.
Harvard, the world’s richest college, will use the proceeds
to finance capital projects including a new law school building
in Cambridge, Massachusetts, preliminary offering documents
show. The university also intends to refinance a portion of its
debt, which totals more than $6 billion, and pay off commercial
paper.
“This is a good time for a blue-chip, high-grade credit to
come to market,” said Peter Delahunt, a senior vice president
who oversees municipal bond sales at Raymond James & Associates
Inc. in New York. Harvard’s expanded borrowing in the past three
years will be outweighed by the demand for a credit of the
“highest reputation,” he said.
The university has kept its top ratings from Standard &
Poor’s and Moody’s Investors Service, even after its endowment
fell 30 percent and Harvard agreed to pay banks almost
$1 billion to get out of financing contracts associated with
its expansion ambitions. The Internal Revenue Service will be
auditing the college as one of 40 whose non-profit status is
being reviewed this year.
Bonds that Harvard sold in December 2008, set to pay 5.5
percent and mature in 2036, traded last week at a price-to-yield
of 3.9 percent, 53 basis points, or 0.53 percentage point, less
than an index of top-rated municipal bonds due in 25 years, data
compiled by Bloomberg show. When they were issued, the yield the
university agreed to pay was 15 basis points more than the
Bloomberg index.

Tax Exempt

Tax-exempt bonds posted their best annual performance since
2000 last year, returning 14.5 percent, according to the BofA
Merrill Lynch Municipal Master Index, as demand for the debt
overwhelmed a more-limited supply, Delahunt said.
Yields on top-rated tax-exempt bonds due in 10 years held
at a seven-week high of 3.09 percent yesterday, according to a
daily survey by Municipal Market Advisors, a Concord,
Massachusetts-based research firm.
Harvard was planning to put $1 billion a year into capital
spending, with 80 percent of that financed with debt, before it
lost about a third of its endowment, Moody’s said.
Drew Faust, the university’s president, said Dec. 10 that
Harvard will suspend work early this year on a $1 billion
science center in Allston, the centerpiece of a campus expansion
across the Charles River.
The value of the endowment, which is overseen by Harvard
Management Co., fell to about $26 billion in the 12 months that
ended June 30, from a peak of $36.9 billion in 2008.

Interest-Rate Swaps

Harvard sold $2.5 billion of bonds in December 2008 amid
the credit crisis, using $500 million to exit $1.1 billion of
interest-rate swap contracts, most of them tied to securities it
planned to sell for the campus expansion. Separately, the school
agreed to pay $425 million in the next 40 years to JPMorgan
Chase & Co. to terminate another $764 million of swaps that were
supposed to lock in rates for bonds for Allston.
Officials disclosed in their latest bond documents that
Harvard is to be audited this year as part of an IRS review of
the tax-exempt status of colleges and universities. The school
said in the documents it “has no reason to believe that the
examination will have an adverse effect on the tax-exempt status
of the university or any other aspect of the university’s
operations.”
John Longbrake, a Harvard spokesman, declined to comment on
the IRS examination. Bruce Friedland, an IRS spokesman, also
declined to comment.

Growing Debt Load

Harvard will have $6.5 billion of debt after this week’s
debt sale, a 71 percent increase from three years ago, Moody’s
said in a Jan. 8 report. The school plans to borrow no more than
$1 billion over the next three years to finance additional
capital projects, the New York-based rating company said.
“One of the university’s credit strengths is its ability
to slow or accelerate capital spending in the context of its
financial position,” Moody’s analysts led by Roger Goodman said
in the report.
Harvard’s debt load is comparable in size to the amount of
general obligation bonds that the city of Chicago will have
outstanding after its offering of about $773 million this week,
Moody’s said. Chicago, the third-largest U.S. city by population
after New York and Los Angeles, is rated Aa3, three levels lower
than Harvard’s Aaa.
The university is selling securities with maturities
ranging from 2013 to 2034, the offering documents show. Barclays
Plc is heading a group of five investment banks marketing the
bonds to individual investors today and institutions such as
mutual funds tomorrow. Massachusetts’s Health and Educational
Facilities Authority is issuing the debt for Harvard.
States, local governments and other municipal issuers plan
to sell about $11.1 billion of fixed-rate bonds this week, 50
percent more than the $7.4 billion issued last week, Bloomberg
data show. About $2 billion will be taxable securities.
Following are descriptions of additional pending sales of
municipal bonds in the U.S.

(Adds analyst comment in eighth paragraph.)

By Caroline Hyde and Sonja Cheung
Jan. 4 (Bloomberg) — The University of Cambridge, the
second-oldest in the U.K., is considering selling bonds for the
first time to take advantage of a rally in credit markets.
The 800 year-old school should “proceed as soon as
possible with a long-dated issuance in the fixed-interest
markets while conditions remain historically favorable,”
according to a recommendation by the Board of Scrutiny, the
university’s watchdog. Cambridge hasn’t sold bonds in the public
market before, according to data compiled by Bloomberg.
“A university such as Cambridge could offer the same sort
of long-term stable cash flows you tend to see with a utility
issuer,” said Simon Ballard, head of European credit strategy
at RBC Capital Markets in London. “It would likely be a
relatively attractive defensive name for buy-and-hold
investors.”
Universities and colleges in the U.K. have no publicly
issued bonds outstanding, while in the U.S. and some other
European countries, such as Spain, schools are more frequent
issuers, Bloomberg data show. European higher education
establishments including the University of Alicante and
University of Valencia have bonds with a face value of 323
million euros in the market, according to the data.
Cambridge spokesman Nick Saffell was unable to comment.
Unprecedented demand for riskier assets pushed European
corporate bond sales to a record 1 trillion euros in 2009 and
drove the extra yield, or spread, investors demand to hold the
notes rather than the safest government debt to the least since
June 2008. The spread tightened to 168 basis points, from as
much as 463 last March, according to Merrill Lynch & Co. index
data. A basis point is 0.01 percentage point.

800th Anniversary

The University of Cambridge’s total financial endowment was
estimated at 4.1 billion pounds ($6.6 billion) as of 2006,
according to Wikipedia. The school, which counts economist John
Maynard Keynes and physicist Stephen Hawking as past students,
has got 800 million pounds of a planned 1 billion-pound
fundraising under its 800th Anniversary program, according to
its Web site.
“Cambridge receives the bulk of its funding from the
government, and if it was to be rated, then this strength would
be duly noted,” said Ciaran O’Hagan, a fixed-income strategist
at Societe Generale SA in Paris.
The Wall Street Journal reported the possible sale earlier.
Lancaster University in the northwest of England issued 35
million pounds of 9.75 percent debentures in 1995, according to
Bloomberg data.

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One of the most important, yet often overlooked, aspects of resume sending is the cover letter (or these days, the e-mail). The cover letter is your chance to make your first impression. A properly written letter should grab the employer’s attention and help set the stage for a personal interview.

Here are simple instructions and a few tips and suggestions for writing a quality cover letter.

How to Write a Cover Letter

The first paragraph of your cover letter should explain why you are writing and what position you are applying for. This paragraph should be concise while at the same time showing your knowledge of the position and the company. Use this opportunity to make a connection to the reader.

“I am writing to apply for the Jr. Typist position. I first learned of XYZ, Inc. after reading the ‘Top 100 Left Handed Work Environments’ in Forbes magazine. Being an advocate for left handed rights, I decided right away that XYZ, Inc. would be a perfect match.”

The second paragraph of your cover letter is generally the “meat and potatoes.” This paragraph should explain to the employer why you are qualified for the position. The first sentence should be your power statement on why you are a match for the position. Follow the first sentence with 2 to 3 specific accomplishments or traits that support your argument. This is not the time for your life story, so list your most relevant, impressive experience. Do not copy these statements word for word from your resume, instead take the opportunity to craft a more conversational tone. The final sentence of this paragraph should summarize your argument while mentioning the position again. Bring it all back home.

“My uncanny ability to find solutions to common left-handed issues has made me the ‘go-to’ member of our local Left Handers Community Center. I have been published in three of the last four quarterly newsletters, and have recently been awarded member of the decade. Next fall, I will graduate with a masters in Left Handed Literature. With these experiences, I feel that I would instantly be able to contribute to your Typist division at XYZ Inc.

Read more here