UK Sovereign

A shock result in the UK general election on Thursday had little effect on the Gilt and sterling SSA market on Friday, leaving the door open for any issuers considering deals next week, said bankers. The medium term picture may be harder to glean, however, with sterling’s fall against the dollar potentially impacting the cross currency basis swap between the two.

Public sector borrowers are considering sterling deals next week — but any issuance will hinge on the result of the UK’s general election on Thursday. The vote will also have a large bearing on Gilt yields, said analysts.

The UK Debt Management Office (DMO) is keeping its options open on a planned syndication for September, as Gilt yields fell following polls showing the opposition Labour Party was gaining ground on the ruling Conservatives ahead of next week’s UK general election.

The UK Debt Management Office is keeping its options open on a planned syndication for September, a deal some investors feel the sovereign should use to push its conventional curve out to 2072. Meanwhile, a French agency is bringing its first syndication in sterling for over two years.

Investors have called on the UK Debt Management Office to extend its conventional curve with a syndication in September — although the view is far from unanimous.

Balancing public money with private profit can be a challenge, and Brexit makes it doubly difficult. The European Investment Bank is set to become something of a football in negotiations between the UK and the EU27 — and the UK’s corporates could stand to lose out. What, if anything, should replace it?

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The UK drew its largest ever book on Tuesday, taking care of nearly a quarter of its overall syndication programme for the 2017-18 financial year in the process. The deal was particularly impressive given the volatile political backdrop in the UK, said a banker on the trade.

Some of the UK’s major borrowers, especially in the utility sector, are preparing for a future without European Investment Bank funding, as the supranational’s lending in the UK is set to be caught up in fraught Brexit negotiations.

The SSA market has played host to a series of strong deals this week and shows no signs of fatigue, as investors flock to make the most of the glut of supply.

The UK drew its largest ever book as it printed its biggest syndication in nominal terms in nearly three years on Tuesday — taking care of nearly a quarter of its overall syndication programme for the 2017-18 financial year in the process. Bankers away from the trade suggested some of the rampant demand may be due to investor hunger for 40 year paper.

The Province of Quebec will print in sterling for the first time in over 20 years after hiring banks on Monday for a five year deal, joining other Canadian provinces in returning or debuting in the currency in 2017. The trade will come in the same week as the UK sovereign sells the first syndication of its 2017-18 financial year.