UK Sovereign

The SSA bond market could have a new issuer to look forward to after the UK government on Wednesday handed the devolved government in Scotland the power to issue its own bonds.

Demand for the UK Debt Management Office’s last syndication of the fiscal year on Wednesday broke records. A reopening of the 2068 index linked Gilt attracted the largest ever book for a UK linker syndication.

The rampant start to 2014 by peripheral eurozone sovereigns is clear to see in this week's funding scorecard, with the region's comeback kids Ireland and Portugal halfway and a quarter way through their funding programmes already. Spain has also made promising progress in its attempt to hit what is its largest ever funding target, with nearly a fifth of its total already in the bag. Italy will look to move into double figures from its 4% status in the coming weeks with a widely expected syndication.

The United Kingdom’s debut sukuk is unlikely to come before October, although the government plans to make an announcement on the deal before July, according to a source with knowledge of the situation. HSBC is frontrunner among banks to arrange the deal, added the source.

Efforts by the UK Treasury to shore up investor confidence in Gilts ahead of a referendum on Scottish independence could create more uncertainty in the long term, according to analysts.

The UK’s Debt Management Office is in discussions with the Turkish Treasury — and other countries — about the practicalities of launching a debut £200m sukuk.

The end of November finds almost every sovereign in the scorecard more than 90% funded for the year. Italy's cause was helped in no small part by a bumper €22.3bn domestic inflation linked bond at the start of the month. The UK - with a funding year running from April March - is also well on track with 70% of its programme completed.

UK Prime Minister David Cameron unveiled plans for a sovereign sukuk debut at the World Islamic Economic Forum on Tuesday. A deal could come as soon as next financial year.

The sovereign funding scorecard expands beyond Europe this month with the addition of Japan. The country has a whopping ¥156.8tr (€1.2tr) target this year but is well on track having raised ¥136.2tr so far.

France and the UK, downgraded by Fitch earlier this year, will probably have to wait until at least 2021 to regain their top ratings, according to a report from the rating agency released this week.

A big new UK government-guaranteed bond issuer is likely to appear in the next few years: the special purpose vehicle that will build a new nuclear power station at Hinkley Point in Somerset.

The UK Debt Management Office printed a larger than planned tap of a 3.5% July 2068 conventional Gilt on Tuesday — leaving it with one inflation linked reopening to complete its syndicated work for the financial year. The sovereign got the deal away ahead of the delayed release of US nonfarm payroll data scheduled for later in the day.