Why Is The Church Of England Selling Bonds?

From the Department of Rendering to Caesar: The Church of England is raising funds through the sale of pound-denominated bonds in the global capital markets.

What Happened: According to combined media reports, Moody’s Investors Service issued an Aa1 long-term issuer rating and Aa1 senior unsecured debt rating for the forthcoming debt issuances, which are being made through Church Commissioners for England (CCE), the charity that manages the church’s $12.1 billion investment portfolio.

Moody’s explained its ratings were assigned as a result of the CCE’s “very strong financial profile with a lengthy track record of sound investment management, significant autonomy over its distributions to the rest of the Church of England, strong liquidity and minimal leverage, excellent standards of governance and financial strategy and an extremely low likelihood of U.K. government intervention that would significantly weaken its creditworthiness.”

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Why It Matters: The church plans to use funds raised in the bond sale to finance social projects and clean-tech endeavors. 

The timing of the new issuance may not be at the most serendipitous time. According to data from Refinitv, corporate bond issuance in Europe during the first half of the year is down 16% from the same period last year, a situation attributed to rising interest rates and the impact of inflation on the returns for fixed-income assets.

In a nod to its history, the church named the endeavor Project Cranmer in honor of the Archbishop of Canterbury Thomas Cranmer who coordinated King Henry VIII’s divorce from Catherine of Aragón and helped lay the groundwork for the English Reformation. But Cranmer's ROI was ultimately not in his favor, as he was executed at the orders of Queen Mary I, Henry’s daughter when she ascended the throne and sought to reverse the Reformation.

Photo: St. Paul's Cathedral in London, courtesy of Stefan Wiegand / Pixabay

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