After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.

Lordy, Lordy, Lordy.

The Lay chaps over at the Church of England are wanting to raise some money via the bond market.

Not to build an Ark for their flock of Australians, who have just endured 40 days and 40 nights of rain in only three days.

No, no, no.

They are wanting to raise some money for their team of 33 fund managers who look after their £10bn investment fund, so they can smooth out the ups and downs of the Godly demands on the fund.

This bond issue will be their very first one and this fund, with 33 managers, has been going for… wait for it.. over 400 years.

As in all things church-related, 400 years of existence means there are a few bodies in the burial crypt which are not meant (in their eyes) to rise up again and re-appear on Earth.

Now, because of this bond issue, past matters have certainly risen up. There are a few, how shall we say, “unusual” disclosures that God’s lawyers have been required to throw into the bond prospectus.

But before we get into the nitty gritty of that bond prospectus, they first brilliantly managed to bring the wrong kind of attention, which had their bankers scrambling for the history books.

You see, they nicknamed the bond issue in-house as ‘Cranmer Bonds’ after Thomas Cranmer who was responsible for helping King Henry VIII create the Church of England, so he could divorce his current wife as she had only borne him a daughter and not a son.

That made Cranmer very famous but when Henry’s daughter Mary came into power, she decided he should lose his head.

He spent two years in jail and promptly went back to being a Catholic, which in those days would normally have led him to having his sentence absolved. Mary, however, was having none of it, so on his day of execution, Cranmer decided Church of England was perhaps the right option after all.

This act reminds me a bit of the Italians in WWII or what is happening with the golfers in Greg Norman’s LIV venture.

Lots of changing of sides to keep the pockets lined.

Now all of this happened in 1556, so this bond issue has managed to drag out one dirty laundry basket and then another one.

In 1704, the Church invested £204,000 into the South Sea Company, which at the time, had a fully disclosed and exclusive contract to ship slaves from Africa to Spanish colonies in South America.

Today, that amount of money would be worth £440m or about $770m.

They continued to invest in the company until the 19th Century and this profiteering from the slave trade created part of the assets in today’s £10 billion fund.

Awkward. And now the actual prospectus for the bond issue has managed to highlight even more issues.
 

To the time machine!

Back in the 1980s we would have a nerdy junior graduate from Oxford or Cambridge University read and highlight anything that may affect our clients’ investment criteria.

These prospectuses would then be filed away for future reference, ready to re-read in case they ever nudged junk bond status.

I can just see one of these spectacled graduates hovering around my desk with this ‘holy’ prospectus under their arm. There’d be hundreds of yellow Post-It notes sticking out everywhere.

Really, there needs to be at least a couple of glaring red Post-Its, if they exist. Definitely one for this caveat pertaining to:

“a threat of, or actual, disestablishment of the Church of England from the State, particularly in the event that such disestablishment were to lead to a dispersal of the Issuers’ assets”.

This means that any next king or queen could ‘do a Henry’ and start a new religion, thus decimating the fund’s property valuations and collection plate income.

The next big concern highlighted must be a one-off, never seen before in a financial admission. The prospectus warns that claims over:

“historical failures in relation to safeguarding . . . could in future grow in scale from currently anticipated levels”

You see, the fund has also met the costs of some claims against bishops related to ‘safeguarding failures’ for the abuse of children or vulnerable adults in the past, thus adding pressure to the fund’s finances.

And finally, these bonds have only managed to get a rating of Aa1 from Moody’s! So even having a direct line to God doesn’t give you a AAA rating!

So, let’s see.. religious wars, slave trading, child sex abuse, worst bond raising market for last 10 years, and an Aa1 rating. All brought up because the Church of England wants to raise £500m.

If they had only gone with the blockchain and issued their own stablecoin backed by God himself, they could have raised that amount without any disclosure to the past.

As for myself, I shall be switching sides until the bond issue gets away, so I can wrangle out of having to take any – on religious grounds.

See you at Mass.

 

The Secret Broker can be found on Twitter here @SecretBrokerAU or on email at [email protected]

Feel free to contact him with your best stock tips and ideas.