Wellcome Trust taps into demand for long-dated bonds

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The Independent Online

The Wellcome Trust, Britain's largest charitable foundation, is launching its first bond to raise money to invest in scientific research ranging from the human genome to bird flu and malaria.

The trust is following the lead of US organisations to become the first UK charity to sell a public bond, it said yesterday.

It hopes to raise £300m to £500m when it issues the 30-year bond next week. The move is intended to tap into unmet demand from pension funds for long-dated sterling bonds, as they seek to match liabilities with secure long-term investments.

The Wellcome Trust intends to plough the money raised into its investment portfolio which is used to fund research. The trust holds more than £12bn of investment assets and spends more than £450m a year on research and related activities. The organisation's funding of biomedical research is second only to that of the Bill & Melinda Gates foundation, set up by the Microsoft founder.

Set up in 1936, the Wellcome Trust funds 3,000 investigators and their research teams in 50 countries.

The organisation starts a roadshow today to gauge investor appetite in the bond issue and expects to launch it before the end of next week.

The rating agencies Moody's and Standard & Poor's have both rated the bond a triple A, the highest credit rating available. Bonds receive an AAA rating when they are judged to carry the smallest investment risk.

Danny Truell, the chief investment officer of the Wellcome Trust, said: "[The bond] gives us greater balance-sheet flexibility and should enhance our mission, which is promoting and fostering research with the aim of improving human health."

The trust has appointed Barclays, JP Morgan Cazenove and Morgan Stanley as joint bookrunners for the bond.

Its investment portfolio has seen average returns of 9 per cent a year over the past decade, according to Standard & Poor's. That means it should not find it hard to raise money from sterling bond investors cheaply which can then be reinvested in more exotic markets to achieve higher returns.

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