USS helps unlock Yorkshire Water restructuring

The £45 billion UK private pension scheme teamed up with Macquarie to support Yorkshire Water in its restructuring of an inflation-linked swap.

Universities Superannuation Scheme (USS) has participated in the restructuring of an inflation-linked swap issued by Yorkshire Water, the pension scheme confirmed.

USS and Macquarie Infrastructure Debt Investment Solutions (MIDIS) both took part in the restructuring which allowed for the removal of the mandatory breaks from the swaps, as previously reported by PDI. As a result, Yorkshire Water’s liquidity risks have been reduced.

USS purchased the long-term, inflation-linked notes from a special purpose vehicle, Aysgarth Finance. The notes will reach final maturity in 2063. Macquarie previously said that it had acquired £50 million (€69.7 million; $76.9 million) worth of inflation-linked notes also ahead of the restructuring.

“This is an exciting transaction for USS and we are delighted to have completed this with Yorkshire, one of the largest and best performing companies in the water sector,” Ben Levenstein, head of private debt and special situations, private markets group at USS Investment Management, said in a statement. “Long-term, inflation linked assets are well suited to USS given the inflation linked nature of our liabilities. USS’s Private Markets Group is an experienced investor across the capital structure within regulated sectors in the UK and very well positioned to provide such bespoke financing solutions.”

Adrian Hunt, group treasurer for Yorkshire Water, also commented in a statement: “USS understood our requirements for the swap restructuring, and were able to align these with its own risk and return requirements and work with us to deliver an efficiently executed transaction.”

USS declined to comment any further on the deal.

USS is the principal defined benefit pension scheme for universities and other higher education institutions in the UK and is one of region’s largest pension schemes with total funds of around £49 billion. The investor has offices in Liverpool and London.