Church of England Pensions Board issues £50m fixed-rate bond

By James Wallace - Friday, April 13, 2018 9:34

The Church of England Pensions Board (CEPB) has raised £50m through issuance of a dual-tranche fixed rate bond, including £30m placed with Royal London Asset Management.

CEPB, which provides housing to retired clergy, has retained the remaining £20m, which could be sold down in the capital markets in the future. CEPB will use the proceeds to replace short term facilities.

The coupon is 3.509% with semi-annual interest payments.

TradeRisks acted as corporate finance adviser and sole bookrunner for the bond issue and was advised by Bryan Cave Leighton Paisner LLP. The CEPB’s legal advisers were Trowers and Hamlins LLP.

The funding was priced in April 2018 “at an attractive credit spread”, according to a statement by TradeRisks, following bilateral engagement with a shortlist of investors. The two tranches mature in 2044 and 2048. The bonds were issued through a special purpose vehicle, CHARM Finance plc, in the SPV’s second bond issuance following a £100m issue in 2015.

Dr Jonathan Spencer, Chairman of the Church of England Pensions Board, said: “The Board is committed to continuing to provide affordable housing in retirement to those retiring clergy who need it. We decided the time was right to raise a further tranche of long term capital to help secure the future of our clergy retirement housing (CHARM) scheme. This finance underpins our long-term strategy to keep or acquire properties that are most suitable for our rental scheme, meeting the needs of retiring clergy in the years to come.”

Canon Sandra Newton, Chair of the Board’s Housing Committee, said: “This is the second long-term financing arrangement the board has entered into. It will provide greater certainty over borrowing costs for a long period, by taking advantage of the current low interest rate environment. Strategically, the bond issued today sits very well with our existing sources of finance for clergy retirement housing.”

David White, Head of Financial Policy and Planning for the National Church Institutions, stated: “Securing this long-term commitment from Royal London Asset Management will help support us in financing housing for retired clergy well into the future. This service is vital for clergy who have not been able to make their own provision for housing in retirement, many of whom continue to play an active and valued role in sustaining the Church’s work in parishes across the nation long into retirement.”

Shalin Shah, Senior Fund Manager at Royal London Asset Management who subscribed to the bonds, said: “At RLAM we manage a range of credit mandates that seek out attractive long-term opportunities within the secured debt space. We are pleased to have participated in this bond financing which helps to meet the needs of the Church’s housing strategy, whilst simultaneously matching our clients’ requirements for attractive long-term income.”

Adam Rushton, Associate Director at TradeRisks, said: “We are pleased to have supported the CEPB in another successful capital markets issuance as they transition to long-term, stable financing. The CEPB benefited from focused bilateral engagement with a targeted group of investors, ultimately delivering a positive result for all parties involved.”

CEPB administers pensions for more than 38,000 people in more than 450 employers connected with the mission of the Church of England and the provision of retirement housing for around 2,500 retired clergy households through a variety of options. In addition, CEPB manages pension fund assets of around £2.3bn.

James Wallace is a freelance consultant and can be reached via Linkedin or email: jawallace32@gmail.com

 

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