Canadian Pension Giant CPP Investments Eyes 50-Year Sterling Debt

Posted on 10/23/2021

Canada Pension Plan Investment Board (CPP Investments) is looking for long-term financing as it markets a 50-year bond in sterling. CPP Investments awarded the long-dated debt mandate to Bank of America, Deutsche Bank, Goldman Sachs, and NatWest Markets to run the bookbuild.

Canadian pensions are not new to debt markets, many raised debt to boost yield and managed liquidity. For example, OMERS Finance Trust (OFT) issues commercial paper and term debt that is fully, unconditionally and irrevocably guaranteed by OMERS Administration Corporation. Established in 2010, OFT aims to continue to grow its presence in the international capital markets as an issuer of debt to institutional investors. In March 2021, OMERS Finance Trust priced its US$ 1 billion, five-year USD Reg S / 144a notes with central banks and official institutions (including sovereign wealth funds) gobbling up 37% of the issue. In May 2020, OMERS Finance Trust priced a 1 billion euro, five-year Reg S / 144a notes, at a yield of 0.488%. That issue had central banks and official institutions taking up 41% of the offering.

Sovereign Debt Comparisons
The U.K. government began offering 50-year bonds in 2005. Belgium, France, Spain, and Italy have sold 50-year bonds. Ireland and Belgium have issued 100-year debt but only in private placements. In 2014, Mexico issued a rare century bond in sterling, raising £1 billion.

The European Central Bank’s massive €1.85 trillion bond buying program and the COVID recovery fund has created more demand for European debt.

Keywords: Ontario Municipal Employees Retirement System.

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