The Church of England Pensions Board issues £100 million 33-year CPI linked bond to fund clergy retirement housing

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The Church of England Pensions Board (”CEPB”) today announced that it has issued £100 million CPI-linked bonds repayable in tranches between 2038 and 2048. £70 million were placed by CEPB’s corporate finance advisers, TradeRisks, who structured and arranged the bond, the first ever sterling issue with the coupon but not the principal linked to CPI. £30 million has been retained to provide quick access to the capital markets at a future date if required. The bond’s coupon of 3.126% increases annually with CPI subject to a 4% cap and a floor of zero, providing a good match for the CEPB’s rental income. The bond issued through a newly established special purpose vehicle, CHARM Finance plc, which will be able to access the markets again in the future.

The CEPB will use a portion of the bond proceeds to acquire the economic interest in 196 existing properties originally financed by the Church Commissioners as part of a long term transition programme.

TradeRisks Limited acted as corporate finance advisor and sole bookrunner for the bond issue and was advised by Clifford Chance LLP. The CEPB’s legal advisers were Trowers and Hamlins LLP.

Ben Fry, Managing Director at TradeRisks, commented “This is a ground breaking transaction which represents a new step forward in the CPI linked bond market. We worked with CEPB and investors to develop an innovative and bespoke solution for CEPB which combines a low all in cost of funding with structured indexation tailored to match CEPB’s cash flows. The use of standardised bond documentation allowed the addition of retained bonds, which will provide funding flexibility in the future. We are delighted to have continued to support CEPB through their transition to long term, stable financing.”