The university, which will pay a fixed interest rate of 3.75 per cent over the 40-year bond, will use some of the sum to fund its major housing and research facilities development in north-west Cambridge.

Cambridge, which follows De Montfort University in issuing a public bond, has not stated the number or identity of investors who have financed the bond - but they are mainly likely to be pension funds.

Investors could trade their shares in the bond on the stock exchange. However, it is thought that most are likely to hold on to their investments for the long term.

The university secured an AAA credit rating from Moody's as part of the bond issue process.

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Sir Leszek Borysiewicz, Cambridge vice-chancellor, said: "We are delighted by the success of this issue, and by the strong support shown by investors in the university and its mission. The proceeds will enable us to continue to invest in teaching and research at the highest international levels."

The bonds will be formally issued on 17 October. The university said in a statement that it will "use the net proceeds from the bond for general corporate purposes, including investment in research facilities, accommodation and other university assets".

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The North-West Cambridge project, which recently secured planning permission, has previously been described by the university as offering "1,500 homes for key university and college employees, 1,500 homes for sale, accommodation for 2,000 students, 100,000 square metres of research facilities, including up to 40,000 square metres for research institutes and private research facilities linked to the university, and a wide range of community facilities".

The development is estimated to have a total value of around ?1 billion.

john.morgan@tsleducation.com