UK

The City of London has faced up to — and seen off — European challenges before, most notably the launch of the single European currency. But as Philip Moore reports, it’s not just Brexit that the Square Mile should be afraid of.

The UK’s largest lenders may be operating in one of the developed world’s only growing economies, but an exit from the European Union could be about to turn their world upside down. Tom Porter reports.

Britain’s north-south divide has continued to widen since the turn of the century. Philip Moore looks at the initiatives attempting to reverse this damaging trend.

George Osborne MP, Chancellor of the Exchequer and First Secretary of State

The head of equity-linked bonds at Bank of America Merrill Lynch has resigned from the firm.

Evofem Holdings, a company backed by Invesco and Woodford Investment Management that is developing woman-controlled, hormone-free contraceptives, has abandoned an attempt to raise up to $200m of new money for the company by floating on Aim.

The UK’s housing associations — regulated, non-profit organisations that provide social housing — are becoming steadily more financially sophisticated. Some have issued bonds and private placements for many years, but the tide of ultra-cheap, very long term bank loans that used to be their funding staple has ebbed. Taking its place has been an institutional investor base eager for long term, yielding, safe paper. This has led to many more associations entering the bond market for the first time, either in their own names, or through an intermediary finance company, THFC. A new model is emerging, of five to seven year bank loans for working capital and bonds for longer term finance. Also in the mix are a programme of government-guaranteed funding and loans from the European Investment Bank. But with finance generally available, what will shape the sector fundamentally is changes in government policy. To many, a spate of recent government decisions seem disjointed, even capricious. The state has cut grant funding, forcing associations to do more commercial activities to subsidise their social housing — more recently, it has forced them into rent cuts and given housing association tenants the right to buy their homes. Joining GlobalCapital to discuss the sector’s opportunities and challenges were three associations, THFC, and three leading banks and advisers to the sector.

In a rash of deals over the past few years, UK universities, Oxbridge colleges and even schools are breaking with years of tradition and embracing the debt markets to hone their edge in competition with their domestic and international rivals. The experience has been overwhelmingly positive so far. Institutions that have taken the step into debt issuance — whether with public bonds or private placements — have found enthusiastic receptions from a broad range of investors. They have been able to lock in long maturities and low rates with bonds, or win tailored funding from private placements and the European Investment Bank. These are exciting times to be involved in higher education’s transition to capital markets — whether for university treasurers tapping new sources of funding, investors diversifying into a new array of high quality credits or arranging banks introducing a new sector to the market. GlobalCapital sat down in Oxford in March to talk shop with leading players at the heart of this new movement.

The UK’s June referendum on European Union membership may be grabbing the public’s attention, but in the background the country’s Debt Management Office has been quietly and efficiently raising the big sums of cash that have been the norm since the 2008 financial crisis. Of far more interest to Gilt market participants is the split between syndications and auctions in the DMO’s funding programme and the effect regulation is having on banks’ ability to provide liquidity — a concern that the UK market is far from alone in having to address. GlobalCapital brought together representatives from the UK DMO, Gilt-edged market makers and the investor community in the lofty surroundings of London’s Tower Bridge to discuss those issues, as well as idiosyncratic features of the UK market, such as the argument for creating Gilts linked to the Consumer Price Index (CPI), rather than the older Retail Prices Index (RPI). The DMO also shared the latest news on its review into the provision of Gilt and Treasury bill reference prices — on which banks and investors expressed their views.

Jimmy Choo, the shoes and accessories designer, has signed a new £200m loan package to repay a number of existing facilities, the company announced on Thursday.

The UK Debt Management Office looks likely to bring two syndications in the first quarter of its 2016-17 financial year, after Gilt-edged market makers (GEMMs) and investors recommended the strategy.

The pity of the uncertainty and volatility caused either directly or indirectly by the upcoming referendum is that it comes at a time when, after a number of false dawns, the UK economic recovery appeared to be gathering some staying power, reports Philip Moore.