Word: bondses
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In the past, Harvard was able to issue double-tax free bonds, meaning no local or Massachusetts state taxes had to be paid on them, Teft says. Taxes are paid by the buyers, not the University, so no-tax bonds are a definite draw for the wily--or even not...
Because of changes in the tax code, however, Harvard is now allowed to issue only $150 million in tax-exempt bonds.
Since the University already has almost $750 million in tax free bonds outstanding--five times the new limit--any future issues will have to be taxable. To balance that tax, a higher yield will transfer more money University's pocket to the buyers,' Teft said.
In order to underwrite its bonds, Harvard has used various investment bankers--mostly Banker's Trust and Goldman Sachs, although the University can use any other firm that offers it a better deal.
While all Boston-area brokerages contacted said they deal with Harvard bonds, not all had them on hand.