Compared with the glitz and glamour of dollars or the depth of euros, the sterling bond market often finds itself playing second or even third fiddle to its typically more attractive neighbours.
But recent deals have shown that need not always be the case. More issuers should take note of what is available in this grey corner of the North Atlantic.
Despite what mainstream UK hacks on Fleet Street might be peddling, the sterling bond market is — to quote one former prime minister — rather strong and stable, at least for rates issuers.
Books have proved as sticky as an iced bun.
Westpac brought a £1bn five year covered bond this week, and when it cut 5bp off the starting spread, it only lost £150m of orders. The £1.75bn book equalled the record for an Australian covered bond.
The International Finance Corp, meanwhile, was showered with more than £500m of extra orders after it set the spread on its £750m five year on Wednesday.
On Tuesday, Korea Housing Finance Corp dipped into sterling for a £300m three year — and investors went wild for the first Korean covered bond in the currency.
The deal's novelty sucked in £1.45bn of demand, allowing KHFC to tighten by an eyewatering 8bp and land flat to estimates of fair value.
Not only was that a great level for a new sterling deal, but it came flat to or inside where KHFC was reckoned to be able to issue in the significantly deeper euro market — a feat repeated by Westpac the following day.
Meanwhile, the sterling-dollar cross-currency basis swap has edged into positive territory for the first time for several weeks, putting sterling funding for rates issuers on a par with dollars.
For dollar-based issuers like the IFC, favourable levels are now achievable. It was able to diversify its funding sources with a £750m five year deal on Wednesday at a level close to dollars.
There are not many sterling rates issuers. Investors looking for triple-A paper are confined to covered bonds from UK issuers and a smattering of foreign banks from Australia, Canada, Germany, New Zealand, Singapore and now South Korea — plus what ever SSAs dip their toes.
Anything new will be welcomed with open arms. And when funding levels look this attractive, issuers would be remiss not to pour themselves a pint of sterling paper.
So, issuers, it’s time to dust off the bowler hat and pinstripe suit and jump on the next flight to London City, where attractive and popular deals might just be waiting for you.