Bank Facilities

Commercial bank debt – including revolving credit facilities (RCFs), term loans, and capital investment facilities – remains an important component of most universities’ financing strategies. Bank facilities offer greater flexibility than capital markets debt but typically on shorter tenors and at variable rates. RCFs are increasingly used to provide medium-term liquidity which helps underpin financial sustainability and going concern matters, and efficient pricing is available. Maturities generally range from three up to around ten years.

QMPF runs competitive tender processes among lenders to ensure clients achieve market-leading terms. We have established relationships with the principal HE lenders including Barclays, HSBC, NatWest, Lloyds, and Santander.

Public Bond Issuance

A number of UK universities have accessed the public bond markets, issuing rated bonds to a broader investor base. Public issuance can achieve very long tenors and, for the right institution, competitive all-in pricing, but carries additional rating agency, legal, and ongoing disclosure requirements. QMPF can advise universities on whether public bond issuance is appropriate for their circumstances and, where it is, support in preparation for the funding process, governance steps and obtaining a credit rating.

Income Strips                                                        

Income strips are a property-based financing solution, which involve institutional real estate or ‘long income’ funds investing through a lease structure. They are most commonly based around income-generating assets such as student accommodation, but there is flexibility to raise funds against various asset types and for both existing and new developments.

Advantages of income strips include their lack of financial covenants, strong institutional appetite, availability of long maturities and the retention of the freehold interest by the lessee. However, the inflation-linked nature of the lease payments, complex structuring options (including indexation caps and floors), tax and balance sheet impacts must be carefully considered. QMPF has extensive experience of structuring and completing income strip transactions, and can help you assess their suitability for your requirements.

Refinancing

For universities with existing debt portfolios, periodic review of facility terms, covenants, margins, and maturity profiles can identify material savings or structural improvements. Where existing fixed-rate facilities are in place and prevailing market rates have risen since inception, there may be a breakage gain payable to the borrower on early repayment – a consideration QMPF assesses using live Bloomberg data as part of any refinancing review. Where market conditions or a university’s relative credit standing improves, there can also be opportunities to replace existing revolving credit facilities at longer maturities, increased facility size or better pricing.

Financial Sustainability and Covenant Advisory

Many universities are currently managing financial covenant headroom across multiple lenders, and a growing number require proactive engagement with funders to renegotiate covenant definitions or obtain temporary relief. This is a complex process requiring sector-specific expertise, careful preparation, and active management of lender relationships – often across several commercial bank, private placement noteholders, or legacy EIB facilities simultaneously.

QMPF has advised a number of universities through covenant renegotiations, restructurings, and consent solicitations. Our approach is to work with clients to develop a clear, evidence-based proposal for funders rather than waiting for lenders to set the terms of any amendment.

A typical engagement involves:

• Preparation of robust financial forecasts and sensitivity analysis for funder presentation, acting as an independent critical reviewer of management assumptions
• Assessment of proposed covenant amendments and development of revised definitions acceptable to both relationship banks and North American private placement investors
• Management of coordinated funder engagement across multiple counterparties to a common timetable
• Parallel consideration of debt restructuring options, including refinancing, early repayment, and breakage cost analysis
• Support through governance processes, including preparation of Finance Committee and Council papers

The sector-wide context is well-documented: the Office for Students’ 2025 financial sustainability review and the Scottish Funding Council’s equivalent report both highlight the third consecutive year of declining surpluses and net operating cash flow across the sector. The Gillies Report (June 2025) reinforced the importance of robust governance and timely communication with stakeholders – including lenders – during periods of financial pressure. Universities that engage proactively with funders, with well-prepared proposals, consistently achieve better outcomes than those that wait.

Treasury Management

QMPF acts as retained treasury advisor to a number of universities, providing continuous access to senior sector expertise between transactions. A typical retained advisory mandate includes:

• Monthly provision of Bloomberg-sourced market data – gilt and swap pricing, relevant bond spreads, counterparty credit ratings, and market commentary
• Quarterly treasury reviews covering covenant compliance, liquidity, shadow credit rating considerations, and hedging strategy
• Annual review of the treasury management policy against CIPFA guidance and USS debt monitoring framework
• Annual treasury strategy: review of financial forecasts, covenant performance, and external perspective on assumptions and risk
• Access to QMPF’s sector-specific Treasury Management Dashboard, a Power BI tool providing peer benchmarking on profitability, gearing, liquidity, and wealth, alongside HE public bond yields and credit spreads
• Governance support – preparation of papers and attendance at Finance Committee or Council as required