GERMANY – The Bundes-Pensions-Service für Post und Telekommunikation, a pension fund for former postal and telecoms employees, has confirmed plans to sell another €7.5bn worth of euro-denominated bonds backed by pension obligations.

In June 2005, government-controlled BPS-PT issued €8bn worth of the bonds. Proceeds from the sale were used to pay the pensions of former postal and telecoms employees – all of whom were civil servants. The motivation for the sale was to avoid having the government finance these pensions directly from its budget.

Bonn-based BPS-PT said the €7.5bn proceeds from its latest bond sale would finance the employees’ pensions until the end of 2007.

Bookrunners for the deal include the banks Morgan Stanley, involved in last year’s sale, as well as ABN Amro and Goldman Sachs. All three banks will begin an international roadshow for BPS-PT’s newest bond next Wednesday.

Last June, BPS-PT issued its bond with maturities of five, ten and 15 years. Morgan Stanley said at the time the demand was particularly strong among institutional investors in the UK and Germany.

According to Germany’s Börsen-Zeitung, BPS-PT the deal’s bookrunners were chosen following a round of pitches made by investment banks. Losers in the selection were Deutsche Bank and Dresdner Kleinwort Wasserstein, the newspaper said.

As with last year’s tranche, the rating agency Standard & Poor’s has assigned the new bonds a ‘AAA’ rating. S&P said its rating was due to the fact that the government must by law ensure that BPS-PT meets its pension obligations.

Created in 2001, BPS-PT pays out corporate pensions to 270,000 former postal and telecoms employees. The pensions are financed via contributions from telecoms giant Deutsche Telekom, postal giant Deutsche Post and the retail bank Deutsche Postbank, which are all now privatised.

Bonn-based BPS-PT is controlled by the German government, which appoints its board of directors. If any gaps in the financing of BPS-PT’s pensions emerge, the government is legally obliged to close them with cash from the federal budget.

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