UK Sovereign

Mizuho Financial Group is to establish a consolidated vanilla derivatives platform in London by combining Mizuho Capital Markets, a derivatives business, with Mizuho International, its securities and investment banking arm.

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Intercontinental Exchange has appointed a founding member of the Bank of England’s Monetary Policy Committee as a director of ICE Benchmark Administration.

Uncertainty over the UK’s future following its vote to leave the European Union and the loss of its last triple-A rating failed to make any dent in demand for the first Gilt syndication since Brexit. Instead, the only real effect was the rock bottom yield at which the sovereign was able to issue.

The Gilt market on Tuesday once again highlighted its immunity to concerns around the UK's vote to leave the EU, as the Debt Management Office conducted a trademark smooth execution with a tap of its 0.125% November 2065 inflation-linked bond.

The UK Debt Management Office has stressed that a plunge in Gilt yields following the UK’s vote to leave the European Union will not affect its strategy, as comments by the Bank of England governor sent rates tumbling further on Thursday.

Even if the terms of the UK’s exit from the European Union are tied up soon, market volatility will remain high — with a second referendum on Scottish independence almost a certainty. And this time, a vote to leave the UK is highly likely.

Capital markets people thought Brexit would not happen because the UK electorate always chooses the sensible option in the end. But it hasn’t.

The UK may have knocked the eurozone periphery off a cliff as it stumbled on its way out of the European Union on Friday morning. Government bond spreads on Friday echoed those during the eurozone sovereign debt crisis. The gap between Germany and the periphery has opened up like the chasm that has developed between UK voters and the political establishment.

Capital markets have been hit by a cataclysm, the worst political shock since 11 September 2001 — though the immediate effects on financial markets may not be as grave as those of the 2008 financial crisis, because the solvency of banks is not in question.

Market indicators suggest the UK will vote on Thursday to remain part of the European Union, with riskier assets outperforming safe haven instruments — meaning the public sector bond market could reopen next week.

The first of three political risks to the stability of the capital markets faced passed without causing disruption this week, as a mechanism attributed with calming fears amid the eurozone sovereign debt crisis was declared legal.