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Bank of England to Buy University Debt

Posted by Richard Ward in ,

Image courtesy of Flickr, Creative Commons

The Bank of England could purchase £350 million in debt sold by Cambridge University.

The university has been added to a list of institutions whose bonds the Bank of England is prepared to buy as part of its quantitative easing (QE) programme.

For the coming round of QE the Bank is looking to snap up £435 billion in bonds from both private and public organisations.

The scheme is designed to increase the money supply, making funds more readily available for financial institutions to lend to profitable enterprise.

Universities comprise £1.2 billion of the £131 billion identified so far by the Bank as potential purchases. In addition to Cambridge University the Bank has also added debt from Cardiff, Manchester and Liverpool's universities to the list. However, Cambridge University represents the institution with the largest bond at £350m, which was issued four years ago, with an interest rate of 3.75%.

To be considered for the list, the organisation must be considered sufficiently creditworthy for the debt to be secure. Perversely, according to credit rating agency Moody's, Cambridge University currently has a better credit rating than the British state itself.