Barclays & UK Higher Education

As the FT reports, “Barclays has revealed a £12.8bn hole in its balance sheet”. It will be seeking to raise £5.8bn to bolster its capital.

Why mention this here?

Barclays is the biggest lender to the UK HE sector. It claims to have relations with 64% of higher education institutions and may be involved in up to half of the total borrowing accessed through loans, mortgages, overdrafts and revolving credit facilities (roughly £5bn in 2011/12).

This may exacerbate a general contraction in lending seen since the financial crash and incline finance directors towards other methods to raise funds for capital investment, such as bonds or partnerships with the private sector.

p.s. While I was on a brief hiatus from this blog, University of Manchester issued a £300million bond. It matures in 2053 when the principal must be repaid – the annual coupon is 4.25%, meaning its annual payments will amount to £12.75million. Moody’s rated the issue at Aa1, stable:

The Aa1 rating reflects the aa2 baseline credit assessment (BCA) of The University of Manchester and the uplift provided by Moody’s assessment of a high likelihood of extraordinary support from the UK government (Aa1, stable) in the unlikely event of the university experiencing acute liquidity stress.