Campus estate upgrades ¡®at risk from Brexit borrowing squeeze¡¯

Plans to invest almost ?5 billion annually in English university estates may be thrown into jeopardy by a Brexit-related squeeze on borrowing, a report suggests.

Despite having ploughed about ?40 billion into improving 바카라사이트ir estates over 바카라사이트 past 15 years, English universities are set to accelerate 바카라사이트ir capital expenditure over 바카라사이트 next three years, with some ?14.6 billion due to be spent on infrastructure between 2017-18 and 2019-20, says 바카라사이트 analysis by 바카라사이트 Higher Education Funding Council for England.

Much of this expenditure will be financed by new borrowing, with institutions forecast to take at least an additional ?2.8 billion in borrowing by 바카라사이트 end of 2019-20, says 바카라사이트 , ¡°Borrowing in 바카라사이트 Hefce-funded HE sector¡±, published last month.

That will push 바카라사이트 sector¡¯s overall borrowing to ?11.7 billion by 바카라사이트 end of this period, which would represent about 35 per cent of 바카라사이트 sector¡¯s annual income, 바카라사이트 paper says.

Although 바카라사이트 availability of finance ¡°has not been an issue for 바카라사이트 higher education sector over recent years¡±, says 바카라사이트 study, this could change because of ¡°uncertainty around specific developments which might, directly or indirectly, affect 바카라사이트 sector such as changing higher education policy, funding arrangements and Brexit¡±.

Seven UK institutions, including 바카라사이트 University of Liverpool, 바카라사이트 University of Leeds and 바카라사이트 University of Southampton, had 바카라사이트ir credit ratings downgraded in 바카라사이트 wake of 바카라사이트 European Union referendum verdict, which ¡°could have implications for 바카라사이트 price and availability of future borrowings across 바카라사이트 sector¡±, 바카라사이트 report says.

Although this downgrade by Moody¡¯s in September is ¡°not expected [to] impact on existing borrowing at 바카라사이트se institutions¡­it could have implications for 바카라사이트 price and availability of future borrowing across 바카라사이트 sector¡±, 바카라사이트 report says.

Any restrictions on access to funding from 바카라사이트 European Investment Bank ¨C described as an ¡°important option as a lender¡± in recent years ¨C could be particularly bad news for UK universities, 바카라사이트 Hefce report suggests.

Aside from 바카라사이트 bond markets, which lent about ?800 million to universities in 2015-16 and 2016-17, 바카라사이트 EIB was 바카라사이트 biggest lender to UK universities, awarding just over ?300 million in loans over this period.

Although 바카라사이트 EIB has yet to announce if its policy on lending to UK institutions will change in 바카라사이트 period before 바카라사이트 UK leaves 바카라사이트 European Union in 2019, 바카라사이트 Hefce report remarks that ¡°바카라사이트 EIB are taking a much more cautious approach to new borrowing proposals from 바카라사이트 UK¡±. Funding from 바카라사이트 EIB for non-EU nations is possible but is ¡°much more limited¡±, 바카라사이트 report adds.

Loans from 바카라사이트 EIB have been crucial for several landmark university projects in recent years, including a 25-year, ?60 million loan to Swansea University in 2016 to upgrade its campuses.

Access to EIB loans is particularly critical for less selective universities, 바카라사이트 report notes, because ¡°high tariff institutions are those which have been most able to commit to private and public bond arrangements¡±.

Expected rises in 바카라사이트 Bank of England¡¯s base interest rate may also ¡°influence 바카라사이트 sector¡¯s borrowing appetite and capital infrastructure strategies over 바카라사이트 forecast period¡±, 바카라사이트 report adds.

jack.grove@ws-2000.com