By: Former Infrastructure Investor

Former Infrastructure Investor
Fri, 31 Mar 2017 11:53:24 +0000

TL;DR: It’s because OSU can invest and earn more interest than they’ll pay.

Simple Example: ENGIE is willing to accept 4% annual returns because OSU is low-risk but the Endowment can earn 6.5% annual – that would net OSU an additional $25M every single year of additional money.

This is a great use of OSU’s balance sheet. OSU is rated Aa1 and people will accept very low returns for that type of investment grade credit for 50 years. The Endowment has a long(er)-term investment strategy and can make investments with higher returns and more risk than Aa1.