Cambridge University has been added to a list of institutions whose bonds the Bank of England is prepared to buy as part of its quantitative easing (QE) programme.

For this round of QE, the Bank is currently looking to purchase £435 billion in bonds – essentially slices of debt which institutions sell to raise funds – from private and public organisations.

It hopes that this will increase the money supply, making more money available for financial institutions to lend to profitable enterprise.

Universities comprise £1.2 billion of the £131 billion thus far identified by the Bank as potential purchases. The Bank has also added debt from Cardiff, Manchester, and Liverpool Universities to the list.

Cambridge issued the largest university bond on the list, however, at £350 million. This bond was issued four years ago and has an interest rate of 3.75%.

To be included on the list, an organisation must be considered sufficiently creditworthy for the debt to be secure. According to the credit agency Moody’s, Cambridge University currently has a better credit rating than the British state itself.

Issuing bonds is a relatively novel way for universities to finance their teaching and research. The practice was adopted from the private sector, which has long made use of them. US Ivy League universities pioneered their use in the higher education sector.

The 2012 bond was Cambridge's first, though Lancaster University had paved the way in Britain by issuing a bond in 1995.

Varsity has reached out to the University for comment.