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Inaugural gilt syndication

  • The DMO will come to the market this week to launch the inaugural green gilt.
  • The gilt will have a maturity of 12 years (31 July) and an ISIN of GB00BM8Z2S21.
  • The green gilt plugs a gap in the gilt curve, which previously saw a 27-month gap, which will now see the new green gilt maturing in the middle.
  • Across the Eurozone there has been very strong demand for green sovereign bonds, with demand often surpassing the equivalent of conventional bonds.
  • We expect strong demand from ESG investors as well as pension funds and other institutional investors.
  • We look for a transaction size of at least GBP6bln, possibly higher, with very strong demand.
  • We note that the DMO has said that it will issue at least GBP15bln of green gilts in the FY21/22 period and plans to launch a second green gilt in the second half of October (with a 20-30 year maturity).
  • JLMs will be Barclays, BNP Paribas, Citi, Deutsche Bank, HSBC and J.P. Morgan.
  • As with most gilt syndications, we expect the transaction to take place tomorrow (on a Tuesday).
  • Timing: The last two conventional gilt syndications have seen books open at 8:30 (while the last two linkers have seen 9:00 book opening times). Spreads are generally set 45 minutes after books open while books close an hour after opening. 9 of the previous 10 transactions have seen the size announced between 10:08-10:35, but the last transaction saw the size announced earlier, at 9:50. The past ten syndication have priced between 12:22-13:21.

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