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LAU’s bond initiative raises $75m for key strategic initiatives

LAU completed a financing initiative with the sale of a $75 million bond issue on February 12, 2008, an unparalleled step among American higher-education institutions in the Middle East.This pioneering move will allow LAU to pursue various programs called for…

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A ticker announces the successful bond transaction.

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LAU and Byblos Bank officers.

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LAU President Joseph Jabbra delivers a speech during the reception at the lobby of LAU's Central Administration Offices in Beirut.

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LAU completed a financing initiative with the sale of a $75 million bond issue on February 12, 2008, an unparalleled step among American higher-education institutions in the Middle East.

This pioneering move will allow LAU to pursue various programs called for by its five-year strategic plan.

The funds will go toward a $120 million capital plan in addition to a substantial land acquisition to expand the Beirut campus.

Assessments from two top rating agencies in the United States released in September 2007 (and reaffirmed in February 2008) reinforced the university’s decision to embark on debt financing. Moody’s graced LAU with an “A3” rating on the global scale, and Standard & Poor’s with an “A-” ranking.

Based on such encouraging evaluations, and advice from Morgan Stanley, the university issued uninsured bonds in February 2008. The issuance coincided with continuing political instability in Lebanon and volatility of financial markets in the U.S. However, Byblos Bank seized the opportunity of being part of this initiative, and purchased the entire bond transaction.

At the reception held to celebrate the occasion on March 11, LAU President Dr. Joseph Jabbra described this successful financial initiative as another achievement in the university’s path toward becoming a top academic institution worldwide. According to Dr. Jabbra, this transaction will enhance LAU’s reputation and help it provide students, faculty and staff a superior academic, research and work environment.

Byblos Bank Chairman and General Manager François Bassil said that LAU’s role extends beyond academics during these testing political times, and by purchasing the bonds, Byblos Bank aims to help the university in the critical task of instilling nationalism in the minds and hearts of the youth of Lebanon.

President Jabbra said, “We have always been a part of the solution, not part of the problem, and we partner with the private and public sectors in order to make sure that society continues to prosper. We have faith in Lebanon no matter what goes on around us.”

Bond Facts
Amount$75 million
Maturity10 years, bullet maturity
Interest Rate6.75 (years 1 to 5)
7.35% (years 6 to 10)
IssuerLebanese American University
UnderwriterMorgan Stanley
TrusteeDeutche Bank, Americas
AuditorKPMG

To learn more about this initiative, you can read the longer version of the story.

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