Governing Council chambers. Kenneth Truong/THE VARSITY

Over one billion dollars: that was the closing balance of the University of Toronto’s actual debt outstanding as of August 31, 2015. Actual debt outstanding is the sum of internal loans issued from internal debt plus actual external debt issuance and for U of T stands at $1.58 million.

The debt burden ratio is the key determinant of debt policy limit, equals interest plus principal divided by total expenditures. It influences the debt policy limit, which is the maximum debt that can be taken on based on a debt burden ratio of five per cent. For U of T, the actual debt stands at 3.7 per cent.

These figures were presented before U of T Governing Council’s Business Board meeting, which occurred last Monday, September 21.

The vast majority of the debt, which includes all long-term external and internal borrowed funds obtained by any means such as debentures, bank loans, and excludes letters and lines of credit and all short-term and medium term internal financing for purposes such as construction financing and fund deficits comes from long term debentures issued by the university that are due between 2031 and 2051.

U of T’s financial endowment remains the largest of any university in Canada, at $1.9 billion dollars, and has grown by 32 per cent over the past decade.


Though the headline debt number may seem imposing at first, this past July Standard & Poor’s maintained the university’s ‘AA’ credit rating. A rating at that level is given to entities whose ability to meet financial commitments is viewed as very strong. “The stable outlook reflects Standard & Poor’s expectations that, within the outlook horizon, U of T will maintain its strong student demand profile, its operating budgets will remain balanced, and its debt burden will decline modestly or be stable,” read a portion of Standard & Poor’s report.

“The affirmation primarily reflects the independence of U of T’s governing bodies, its considerable financial resources, and Ontario’s track record of non-interference in the sector,” the agency said in their research update.

Standard & Poor’s looked specifically at how U of T would fare if the Ontario government, which was recently downgraded to an A+ rating, was itself facing default. The agency believes that U of T would be able to weather such a scenario and would not default on its obligations.

Standard & Poor’s stated in their report that their projection can be revised if U of T runs operating deficits as a result of a significant reduction in government grants, or substantial pressure in U of T’s resilience in the event of an Ontario default scenario.

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