In an effort to cut long-term borrowing costs for two projects at the Medical School and the Faculty of Arts and Sciences, Harvard last Wednesday sold $17,665 million of bond anticipation notes.

The one-year notes refinance a similar issue from last December. Although the University plans ultimately to sell long-term bonds to cover the projects' financing costs, Financial Vice President Thomas O' Brien said interest rates are too high right now.

The move allows University to save money while waiting for an expected drop in interest rates.

The new notes, known as Series 5, were bought by the Bank of Boston. Its offer to charge Harvard 5.5 percent interest on the notes was the lowest of about 15 firms submitting bids, said Chris Pratt, an official in the Office of Financial Systems.

The University is currently paying 5.8 percent interest on the $17.7 million of Series 4 bonds, which Series 5 replaces. For a long-term bond issue, rates would run about 9 or 10 percent, Pratt said.

The notes are being used to finance construction of a new 16-story building in the Medical Area, in which the Department of Genetics will own four floors, and for several renovation projects in FAS laboratories.

Harvard already owes $626 million on six bond issues dating back to 1972. Some $350 million of that total has gone to finance construction and interest charges on the $302 million Medical Area Total Energy Plant.