UK Sovereign

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.

The UK Debt Management Office has picked the lead managers for the first syndication of its 2017-18 financial year, which it has scheduled for the week beginning May 15.

The UK Debt Management Office has tweaked its funding target for the 2017-18 financial year, cutting its planned Gilt sales by £900m to £114.2bn. The sovereign has also picked a bond for its next syndication.

Investors were hit with a fresh political surprise on Tuesday, as UK prime minister Theresa May announced that the country would hold a snap general election on June 8.

The first round of the French presidential election takes place this Sunday and, while the market is mostly quiet, Derek Halpenny, head of global markets research at MUFG, says that market participants have not priced in much risk of a shock anti-EU result.

UK prime minister Theresa May’s shock general election call on Tuesday may be a calculated attempt to crystallise the Conservative Party’s strong opinion poll lead into actual seats at Westminster — but she could simultaneously weaken her strong stance against a second Scottish independence referendum. That would be bad news for anyone hoping for a favourable outcome for the UK’s economy and financial sector in the Brexit negotiations.