The bonds have been arranged privately with a small group of investors and cannot be listed on the stock exchange or traded.

It is thought to be the first time that a series of smaller colleges have joined together to issue private bonds in the higher education sector.

The law firm advising on the deal, Mills?and Reeve, said it could provide a model for other universities wanting to secure investment.

The Cambridge colleges will use the funds to finance on-going programmes in college buildings. There are 18 colleges involved in the scheme including Christ¡¯s College, King¡¯s College and Trinity Hall.

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Together, three bonds were arranged through ¡°special-purpose¡± intermediary companies with the money then lent on to the colleges. The bonds have an average interest rate of 4.42 per cent and average maturity of almost 33 years.

Each individual college has borrowed between ?3 and ?18 million and the loans are separate so that no college is accountable for another¡¯s debt.

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Sarah Seed, banking partner at law firm Mills?and Reeve, said: ¡°The reality is that the higher education sector in the UK, and across the world, is experiencing significant change. This requires new solutions, especially in the area of finance.¡±

Raising funds through private, rather than public, debt placement means that no credit rating is needed.

Last year, the University of Cambridge itself issued a ?350 million public bond to raise money for building projects.

holly.else@tsleducation.com