Uniting Financial Services successfully completed its first approach to the fixed income capital markets last week, raising about $30 million through the issue of subordinated notes to institutional investors to support investment activities in alignment with the United Nations’ Sustainable Development Goals.
The notes qualify as ‘SDG Bonds’ due to the alignment of the UFS ethical and ESG investment process with the UN Sustainable Development Goals. UFS has issued the notes to diversify its investor base and to enhance the capital management of its balance sheet business.
Warren Bird, UFS executive director and himself a former specialist fixed income expert, said: “Not only is this our first capital markets issue, but we understand that it’s very rare for a faith-based organisation of any denomination to undertake such a fund raising. That we’ve been able to do so is testament to the professional, prudent and profitable way that we’ve been investing the Uniting Church’s funds for many years.
“It’s a reflection of the growing support in the funds management sector for investment processes that are grounded in the sort of ethical principles that the Uniting Church has championed for many years – investing in activities that don’t harm people’s lives or damage the environment, but contribute to a healthy and sustainable communities,” he said.
The notes have a 10-year maturity but are callable after five years. They are floating-rate securities that pay interest quarterly; and have been priced in the market at a margin of 3.25 per cent over the three-month BBSW reference rate, stepping up by an additional 0.75 percentage points if not called.
The fund raising included a significant cornerstone investor and several smaller ones. The transaction arranger and sole lead manager to the issue was ANZ Capital Markets.
UFS is the Treasury and Investment Services arm of the Uniting Church in NSW and ACT. Its Tier-1 capital has been contributed by the Synod in NSW and ACT, with other Uniting Church organisations holding at-call and fixed-term debenture investments. UFS is looking to strategically diversify its investor base to include external institutions such as the fund managers who’ve supported this transaction.
Bird said: “The UFS mission is to undertake disciplined ethical investment in order to help make the world a better place. It’s exciting that we’ve been joined on that journey by the investors in our subordinated note issue.”