28 April 2022
The States of Jersey today priced a £500 million rated public listed sterling bond to re-finance the employee past-service pension liabilities.
This is the first of the borrowing approved by the States Assembly in 2021 and it attracted strong interest from investors.
A team from Treasury and Exchequer, the Government's Chief Executive, Suzanne Wylie, and Minister for External Relations, Senator Ian Gorst, met potential investors over the course of two days in London and virtually.
This has enabled the States of Jersey to secure a fixed rate of interest (coupon) of 2.875% with a final maturity of 30 years. The proceeds of this first tranche of borrowing are being used to repay the past service pension liabilities of the Jersey Teachers Superannuation Fund and the Public Employees Contributory Retirement Scheme, as agreed in the Government Plan 2022-25.
The bond issuance follows the advice of the independent Treasury Advisory Panel and the Government's appointed debt advisors, EY. The joint Lead Managers (also known as book runners) for this second bond issue are HSBC Bank plc, Barclays Bank plc, Lloyds Bank plc and Royal Bank of Canada, London. The UK Legal Adviser appointed to act for the States of Jersey is Allen and Overy LLP and Carey Olsen LLP acted as Jersey legal counsel.
The Minister for Treasury and Resources, Deputy Susie Pinel, said: "This has been a successful outcome to our first bond issuance for eight years. The long-standing partnership between Jersey and the United Kingdom, combined with our strong and stable credit rating, has played a key role in the successful issuance of the bond.
"We are able to raise funds in this way due to our strong credit rating, which is underpinned by our healthy financial reserves. This will generate a cash saving of approximately £3.6 billion over the long term, which taking into account inflation, equates to around £700 million."
Dominic Kerr on behalf of HSBC said "The success of this transaction reflects investor confidence in the Government of Jersey as a counterparty of the highest quality. The strong order book reflects broad-based support from the institutional investor base in the UK, Continental Europe and Asia. We were delighted by the investor response to this transaction – investors appreciate Jersey's prudent financial management, its strong fiscal buffers and the strength with which it is emerging from the COVID-19 pandemic"
Representing Lloyds Bank, Ed Jennings said "We were delighted to support the SoJ team in such a successful capital markets execution. Investors responded extremely positively to the presentations from the SoJ management team and after navigating a period of significant market instability the SoJ team chose to launch the transaction into a brief window of stability. The strength of the orderbook progression highlighted the depth of investor support for the SoJ credit; that support allowed the SoJ team to deliver the targeted size and at an impressively low coupon, representing a demonstrably strong outcome particularly in light of the challenging market conditions."
Rob Lamb, on behalf of Royal Bank of Canada, London, said: "The success of the deal is testament to the hard work and focus of the States of Jersey team who built such strong support from both UK and international investors. Jersey's credit story clearly resonates with institutional accounts who sponsored this well subscribed 30-year bond transaction. RBC is delighted to have been selected to partner with Jersey on such an important and ultimately successful transaction."
"The pricing achieved for the £500m transaction shows strong support from the Sterling market investor base. We saw strong engagement during marketing and this outcome leaves Jersey very well placed to meet its future funding requirements in the debt capital markets" commented Lee Cumbes, Managing Director, Head of DCM and Public Sector EMEA at Barclays Bank.
Giles Barling, partner, at EY Capital & Debt Advisory, who acted as our debt advisor said. "We are delighted to have supported the States of Jersey on their successful £500 million public bond issuance which follows on from the debut issuance in 2014 which we were also privileged to advise on. This transaction is the result of tireless work by the States of Jersey and the extremely strong outcome reflects this hard work and the AA- credit profile of the Island."