Mild support for University of Canterbury philanthropic bonds

As reported in mid October, the University of Canterbury launched a unique philanthropic ten-year bond issue, under which it is hoping to raise NZ$50 million and would take over subscriptions of a further NZ$50 million. While the bonds would pay a coupon of 7.25 per cent for the first five years, investors would be encouraged to nominate a lower or no coupon and to donate all or part of their principal upon maturity.

The university did indeed raise NZ$50 million, although it did not receive any oversubscriptions. And, a small number of investors have already opted to donate the principal or receive a reduced coupon.

This appears to have been a very successful exercise, even without any oversubscriptions. Every other university in New Zealand and Australia can now be expected to follow this example.