The Cleveland Clinic will become the first not-for-profit health system to finance its long-term projects with bonds that don't mature for 100 years.
The century bonds will allow the 11-hospital system to bring in a new group of investors looking to add longer-dated debt to their portfolios. They priced last week at par with all-in yield of 4.858%. About 40 investors participated in the offering, and the strong interest allowed the system to tighten pricing to 160 basis points over the 30-year treasury.
Steve Glass, the Cleveland Clinic's chief financial officer, said the bonds are “as close to permanent capital as you can get.”
Few organizations can promise that they'll be around in 100 years, so most issuers of century bonds have been colleges and universities, which can draw on their long histories and strong reputations to attract investors.