UK Sovereign

While most sovereign debt management offices pride themselves on being dull, Spain — which hasn’t had the calmest of times in the primary issuance market over the last four years — decided to take a different tactic this week. And it paid off in bucket loads. Other sovereigns, both peripheral and core, should take note.

The UK Debt Management Office has hired a group of banks to syndicate its debut sukuk. It is expected to issue the £200m debut in the coming weeks — which means that it is likely to beat rival Western European sovereign Luxembourg in the race to become the first to issue. The UK DMO also named leads for a syndicated Gilt sale for the week of June 23.

This week's scorecard covers the funding progress of sovereign issuers, with every issuer with a funding year that matches the calendar year either over the halfway mark or approaching it. Next week's scorecard will deal with European supranationals and agencies.

The UK is likely to syndicate a new 30 year conventional bond in June, after finding overwhelming support for the tenor from investors and banks this week. An inflation linker of similar tenor could follow in the second quarter of its financial year, after the idea drew similar interest.

The UK government will consider selling part of it debut sukuk to retail investors, according to a market official with knowledge of the matter. But some bankers warned that this could over-complicate the deal.

Barclays has announced plans to take an axe to its investment banking operations, a move which will see 7,000 job cuts across the globe by 2016. The restructuring will also see a streamlining of the bank’s Asian operations, but despite the expected downsizing, bankers are not expecting any massive upheaval just yet.

The attention being paid by UK politicians to Moody’s comments on how Scottish independence would affect both the newly independent country and the leftovers of the UK is at best laughable and at worst a sign of the poorest of politicking.

This week's scorecard covers the funding progress of sovereign issuers, with Belgium, Ireland, Netherlands and Portugal all over the halfway mark on their programmes for the year. Next week's scorecard will deal with European supranationals and agencies.

Network Rail is set to leave the capital markets after the UK government decided that it could guarantee better value taxpayer money by lending directly to the agency. But the funding team’s jobs appear to be safe and there has been little impact on Gilts following the announcement.

Ireland's return to bond auctions last month helped the sovereign reach nearly 60% of its funding target for the year. Across the Irish sea, the UK started its financial year with a £2.577bn auction - and a reduced funding target of £128.4bn.

The UK Debt Management Office slashed its Gilt sales target on Wednesday, when it introduced its funding plan for the 2014-2015 fiscal year — a move which should boost demand for UK government bond syndications.

A remarkable start to the year for the eurozone periphery is in clear view in this month's sovereign funding scorecard. Just two months into the year, Portugal has completed more than half of its target, while Ireland is not far behind. At the other end of the volume spectrum, Spain is making good headway in tackling its €133.3bn target with 26% completed, while Italy — which has yet to sell a syndication this year — is behind on 18%.