UK Sovereign

During a recent market consultation, Gilt investors called on the UK Debt Management Office to issue floating rate notes linked to Sonia, the Bank of England’s recommended replacement for Libor. There are plenty of reasons why this is a good idea.

The first bond from the UK’s five year old Municipal Bonds Agency will be launched in the next week or two and, thanks to some tweaking of the agency's operating practices, more are set to follow, writes Lewis McLellan.

The buy side is keen to be able to buy Gilts that pay a coupon linked to Sonia, investors have told GlobalCapital. The matter was also raised with the UK Debt Management Office, according to the minutes of its latest consultation meeting.

The UK Debt Management Office and the UK Treasury have launched an invitation to tender for the appointment of syndicate banks to run the sovereign’s second sukuk, which is being planned for this year.

Lancashire County Council looks set to become the first borrower to make use of the UK Municipal Bonds Agency, preparing a deal to hit the market in the next few weeks. A second bond from the MBA is set to follow in March or April.

The UK Debt Management Office has chosen the week for its fifth and final syndication of its 2019/2020 financial year.

Andrew Bailey is seen as a ‘safe pair of hands’ as the new governor of the Bank of England. But while he is a veteran of the bank, his views on monetary policy are not well known, as he has never served on the Monetary Policy Committee. In that respect, though a career central banker, he resembles Christine Lagarde, who has taken the helm at the European Central Bank.

The shine from last week’s Conservative Party win in the UK general election has worn off in the UK Gilts market, due, in part, to fears that the country may crash out the European Union without a trade deal in place.

This week's funding scorecard looks at the progress European sovereigns have made in their funding programmes as we approach the end of 2019, with some issuers also setting their funding targets for 2020.

The solid victory for the Conservative Party in the UK election has given investors a burst of confidence. But the rise in rates has proved short-lived and is unlikely to spark any supranational, sovereign and agency sterling issuance. Meanwhile, the outlook for the Bank of England has become slightly more hawkish.

Capital markets are set for a surge of adrenalin on Friday after Boris Johnson’s Conservative Party secured a thumping majority in the UK’s general election, removing a huge weight of uncertainty about Brexit. With hopes also leaping of a US-China trade deal, government bonds, equities and sterling will all move in a risk-on direction on Friday — the only question is how far.

Sterling is set to take a bigger slice of the socially responsible bond market as a result of a number of initiatives, including reforms that are putting the pressure on UK pension funds to focus on environmental, social or governance (ESG) factors in their investments. Burhan Khadbai reports