The Sovereign Wealth Fund (SWF) has directed Barclays, BNP Paribas, HSBC, and JPMorgan to serve as joint global coordinators in order to schedule investor meetings beginning on June 3.

The Arab News states that, contingent on market conditions, a sale will occur after investor calls.

According to reports, this would be the second offering by Saudi entities in sterling and the first since 2020. Two tranches of bonds denominated in sterling with five- and fifteen-year maturities are intended to be issued by the fund.

With about USD 1 trillion in assets under management, the PIF intends to boost capital deployment from USD 40 billion to USD 50 billion annually to USD 70 billion after 2025.

The fund raised USD 3.05 billion from a sukuk deal in October 2023 and USD 5 billion by selling a triple-tranche conventional bond in January.

In addition, the PIF started selling sukuk denominated in US dollars with priority payment for seven years.

The bond sale’s initial indicative price was set at a premium of about 115 basis points over US Treasury bonds, the reports revealed.

Goldman Sachs, HSBC, and Standard Chartered have been designated by the Kingdom’s Sovereign Wealth Fund to set up meetings with prospective investors.

Moody’s Investors Service noted that the sovereign fund has raised USD 8.5 billion through green bond proceeds in 2023 and is leading sustainable initiatives in the Gulf Cooperation Council region.

Meanwhile, official data from Saudi Arabia shows that the private sector non-oil growth was stable in May, with the Purchasing Managers’ Index slightly decreasing to 56.4 from 57 in April.

According to the Riyad Bank Saudi Arabia PMI report by S&P Global, business activity in the country continued to grow at a significant rate in May 2024, maintaining a trend of strong output growth in the non-oil economy.

The post Saudi wealth fund PIF set to issue sterling-denominated bonds appeared first on International Finance.

All three regions experienced the economic shock of the COVID-19 pandemic. EU countries and the UK have struggled with dramatically rising energy prices due to the Russian war in Ukraine. But two specific problems in the UK are compounding the country’s inflation woes: the negative economic shock of Brexit and the UK’s reliance on the financial services sector. Therefore experts think rate hikes by the Bank of England will not be enough to bring inflation down.

The UK government should also play a role in re-balancing the post-Brexit economy away from financial services and towards other traditional sectors such as manufacturing. Interest rates are a blunt tool to combat inflation, but they remain central banks’ main tool. They affect the economy in various ways. The most obvious is to reduce the demand for goods and services by increasing the cost of various forms of debt (e.g. mortgages). However, interest rates also affect the ability of companies to repay their debt and reduce debt.

In the 1950s the UK had a balanced economy, more evenly split between manufacturing and services. Manufacturing (including gas, electricity and water utilities) accounted for over 40% of total UK economic output, while the service sector accounted for 50%. The UK was responsible for a quarter of world trade in manufacturing. The government of the time prioritized production for export, making the UK a leading shipbuilder and a European centre for the production of cars, coal, steel and textiles for sale to other countries. Science-based industries such as electronics, computers and engineering also thrived in the UK and the country benefited from this third technology revolution.

However, advances in science-based industries have not been rapid enough to offset the decline in employment in manufacturing in the UK from the 1960s onwards. In the 1970s, the government embarked on economic policies centred on a housing boom and financial markets, the focus of the City of London. The British public has been told that their future lies in working with their brains, not their hands.

The deindustrialization policy was initiated by British Prime Minister Margaret Thatcher and continued under Tony Blair and David Cameron. These policies were presented as economic modernization that would improve workers’ wages and society at large. Even the Labor government, traditionally associated with the working class, believed that the future lay in the knowledge economy and set out to transform Britain into a global service provider.

By 2011 around 80% of UK workers were employed in the service sector and only 10% in manufacturing. Various factors explain this decline in manufacturing jobs, including the replacement of routine labour by robots and computerized systems, rising imports from China and other emerging economies, and government policies.

The rise of the City of London, finance, insurance and property industries under Conservative and Labor governments has transformed Britain’s economic trajectory. For example, the city has attracted the best-educated people from other regions and professions into high-paying London jobs. People who might have become scientists or engineers instead became bankers or hedge fund managers. So although the city generates €85 billion a year and employs over 580,000 people, it’s not a goose that lays Britain’s golden eggs, but rather a cuckoo in the nest. It has crowded out other sectors that traditionally provided prosperity to the whole country.

The UK financial sector is now causing another problem: its dominance has made it harder for the Bank of England to control inflation amid concerns that higher interest rates will weigh on banks’ balance sheets. For this reason, monetary policy alone will not be able to contain inflation in the UK. The bank has spoken about the difficulties it faced in forecasting the recent surge and continued inflation. But advances in statistical techniques and computing power have improved the ability to forecast inflation.

On the other hand, according to Edward Thomas Jones, Lecturer in Economics, Director of the Institute of European Finance, Bangor University and Yener Altunbas, Professor of Banking, Bangor University, potentially unanticipated government policies and the structure of the UK economy posed a greater challenge. Banking models had little chance to accommodate the political turmoil and policy changes resulting from Brexit. For example, post-Brexit trade between the UK and the EU has become significantly more difficult, leading to a drop in supply and rising prices. Also, more people from the EU are leaving the UK than arriving, putting downward pressure on wages in certain sectors and exacerbating the inflation problem. Brexit, coupled with the UK’s oversized financial sector, is making it too much harder for the Bank of England to control inflation. The government needs to rebalance the UK economy, with science-based industries playing an important role. This would ensure that the Bank of England can adjust interest rates to fight inflation without having to worry about how that will affect the outsized financial services sector.

Brexit to blame for rising inflation

When the UK voted to leave the EU on June 23, 2016, financial markets were caught off guard and the sterling exchange rate depreciated sharply. Since then, British imports have become more expensive. The CERP.org column, published in November 2017, found that the weaker sterling boosted consumer prices in the UK by 1.7% in the year after the referendum. Updating the analysis with more recent data, it’s estimated that Brexit depreciation has boosted UK consumer prices by 2.9%. This means an increase in the cost of living for an average UK household of 870 per year, meaning people have to work 1.4 weeks longer to afford the same goods and services.

The Brexit referendum took place over three years ago and the United Kingdom officially withdrew from the European Union on January 31, 2020. While the debate on the economic fallout from Brexit has focused on forecasting long-term impacts, enough time has now passed to examine how the UK economy has been impacted by the Brexit vote. There are two aspects of impairment which are worth highlighting. First, the sudden drop in sterling, which was the sharpest exchange rate depreciation since the collapse of Bretton Woods in any of the world’s four major currencies. Second, despite some short-lived appreciation, sterling’s decline has proved unusually persistent. Currently, the Sterling exchange rate is $1.30 against the US Dollar and $1.20 against the Euro. These values are similar to those after the referendum.

Textbook economics predicts that imported goods and services will become more expensive when the exchange rate depreciates. But the experts examine this mechanism in detail using consumer price data collected by the Office for National Statistics (ONS) to calculate the UK’s official consumer price index (CPI). The main variation they use to find out the impact of the weaker exchange rate is the difference in import risk across 84 product groups.

The aggregate import share is a weighted average using 2016 CPI expenditure weights. The standard deviation is unweighted and calculated across 84 COICOP (classification of individual consumption by purpose) classes. It shows import shares across 12 spending categories in UK consumer spending, accounting for both direct import consumption and indirect consumption of imported inputs used by domestic producers.

Import shares tend to be relatively high in manufacturing, being highest in clothing and footwear. For every pound spent, British consumers spend 49p on imports in this category. In the case of services, the import shares tend to be significantly lower. For example, education only has an import share of 5%, while restaurants and hotels have an import share of 17%. The import share of total UK consumer spending is 29%, with direct and indirect import consumption split roughly equally. Product groups with higher import shares are more exposed to sterling depreciation, which is the reason consumers experience the rise in prices of these products.

Also, experts officially estimate the impact or pass-through of sterling depreciation on UK consumer prices using quarterly data from 2011 to 2018 at the product group level. They found convincing evidence for a high pass-through. The findings stated that if the pound sterling were to depreciate, the price increase for each product group would be the proportion of product imports multiplied by the extent of the devaluation.

The results suggest that the exchange rate pass-through of the Brexit devaluation on the overall CPI corresponds to the overall import share. The Sterling depreciated by around 10%, given that the import share is 29% for the UK. They estimate that Brexit devaluation boosted consumer prices by 2.9% in June 2018. This represents an increase in the cost in the UK.

Experts noted that there is some uncertainty in this estimate, but it is clear that the effect is large. In the absence of evidence of an opposite increase in nominal wages, results suggest that the Brexit devaluation has had a significant negative impact on real wages and average living standards in the UK. Comparing the spending patterns of households in different deciles of the income distribution shows that the costs of devaluation are evenly distributed across all income levels, since there is no systematic relationship between income and the share of imports in household spending.

However, the impact on inflation differs significantly across regions. Households in Northern Ireland and Wales fared the worst as they spend a relatively higher proportion of their income on highly imported products such as food and drink, clothing and fuel. In contrast, households in London were least affected as they had comparatively higher expenses for rent, which has a low import share. Consumer prices rose by 0.7 percentage points more in Northern Ireland than in London.

The decision to leave the EU is the most important change in British economic policy in a generation. There is a broad consensus among economists that the long-term welfare effects of Brexit will be negative, but it will be years before these predictions can be rigorously tested.

The post The UK inflation rate surprise appeared first on International Finance.

Nigel Green, founder and chief executive of deVere Group, said: “There is a growing sense of optimism that the UK will not now crash out of the EU without a deal. This is being reflected in sterling’s positive moves.

“We can expect a more sustained rally of the pound as a result of this week’s three votes, but only after the EU has forced the UK government to justify an extension to Article 50.

“The government will be forced to articulate options that will be discussed by the parliament, such as Labour’s proposal for remaining in the customs union, the Norway Plus option, another referendum or general election. All but the latter will be good for sterling.

“An election would likely solve nothing since both main parties will presumably again have ‘supporting the will of the people on Brexit’ in their manifestos.”

Earlier this week, the deVere CEO joined the growing calls for a second referendum.  He noted: “There is no parliamentary majority for any Brexit option.  Allowing the public to vote and giving them a final say is quite simply the only credible solution we now have available.”

He goes on to add: “Any new vote must also include the 700,000-plus British expats who are disenfranchised from the UK political system after 15 years overseas and subsequently denied the vote on something that directly affects them.

“All other G7 countries except the UK allow their citizens voting rights for life. Why is Britain different? It is especially galling as they are potentially still liable for UK inheritance tax but are not allowed to vote in the UK after 15 years.”

Mr Green concludes: “The pound is likely to rally—but there’s also a note of caution as this will depend on what the government decides to do with any extension of the 29 March deadline.”

The post Pound to rally on third parliamentary Brexit vote appeared first on International Finance.

Sterling was down heavily against all major currencies, as investors sought to insure themselves against the increasing possibility that talks between London and Brussels will break down over the coming months.

Analysts said sterling’s slide – which makes imported goods and foreign travel more expensive but UK exports cheaper – would push up inflation and lead to a renewed crunch on living standards at a time when support for the government and its handling of Brexit has fallen sharply.

The impact from the weaker pound has been felt by Holidaymakers. The walk-up rate at Forexchange bureau de change in Cardiff airport had dropped to just $1.04 (€0.90).

Speculation against the pound has intensified in the past week, as markets have learned to deal with warnings from Mark Carney, the governor of the Bank of England, and Liam Fox, the international trade secretary – about the possibility of Britain chaotically exiting the EU next March. While the government has insisted that it still expects negotiations with the EU over the next few months to prove successful, currency traders have been preparing themselves for the possibility of a deal not to emerge—and hedging against the possibility of harsh post-Brexit conditions.

With less than eight months to go before the UK’s planned departure date, financial markets have now started to take seriously the chances of chaos at the borders and damage to supply chains.

“What we are seeing is broad sterling weakness, a very aggressive weakening trend,” said Peter Kinsella, a strategist at Commonwealth Bank of Australia.

The pound lost more than half a cent against the dollar to trade below the $1.29 level for the first time since late August 2017. Sterling also dropped half a cent against the euro to its lowest level for nine months and also posted losses against the Japanese yen and the Swiss franc.

Sterling was trading above $1.43 against the US currency in April, but has been in steady decline due to Theresa May’s inability to find a Brexit plan acceptable to both the EU and her own party.

Analysts said the decision last week by the Bank of England to push official interest rates above 0.5% for the first time in almost a decade has failed to support the pound.

Investors believe the Bank’s monetary policy committee (MPC) will be in no hurry to move again following Carney’s hint that it would take another three years for official borrowing costs to double from 0.75% to 1.5%. Attention in the City will now focus on Friday’s growth figures for the second quarter of 2018, expected to show the UK economy expanded by 0.4%.

One former MPC member, Andrew Sentance, wrote on Twitter that the next stop for the pound could be $1.25 and that ultimately, it might fall below $1.10.

But analysts at the US investment bank, Morgan Stanley, said they expected the pound’s weakness to be temporary—stating that despite any prospects of further ups and down in negotiations in the coming months, Britain was likely to secure a deal with the EU.

“We see this as a short-term trade as the conclusion of any trade negotiations by early 2019 should cause the pound to strengthen” the analysts said. They predicted that by the end of next year, the pound would be trading at $1.50, around the level at which it stood before the UK voted to leave the EU in 2016.

The post Sterling falls against dollar and euro amid fears of no-deal Brexit appeared first on International Finance.

Don Smith

October 27, 2016: Despite a run of better than expected UK economic data since the Brexit vote – including 0.7% second-quarter expansion, beating estimates – financial markets are increasingly concerned about the outlook for the country’s economy and its currency.

This can be seen most dramatically in the sterling’s plunge on the foreign exchanges, which shows little sign of abating. On a trade-weighted basis, the pound declined 15% between the June 23 referendum and October 12, while it has moved from 0.76 to 0.90 versus the euro over the same period.

Some bounce back from this sharp slide appears likely, but there’s little doubt that the sterling’s underlying trend remains firmly downwards.

Although the UK economy should steer clear of recession, the anticipated broader effects of Brexit may soon become more evident. As a result, growth is expected to slow next year.

Consequently, the Bank of England (BoE) may cut interest rates further to provide additional support. The next move would likely be a decrease to 0.1% (from 0.25%), but this might not occur until mid-2017.

With interest rates already so low, and an uncertain path ahead for the economy, the BoE will exercise caution when deploying the dwindling number of arrows in its quiver. It will therefore likely attempt to influence interest rate expectations ahead of any actual move, continuing to issue a very dovish message to the markets.

While inflation is expected to keep rising, the BoE will continue to regard this as a short-term phenomenon, which doesn’t challenge the longer-term low-inflation outlook.

At the same time, the sterling’s steep fall was largely unexpected. The pound is being driven by psychological forces, technical moves and speculative reasoning, all of which can be especially volatile and therefore very hard to predict.

The significance of the UK’s decision to leave the EU, and very likely the EU single market, is immense. According to leaked Treasury documents, a so-called ‘hard Brexit’ could cost the UK up to €73 billion annually, leading GDP to underperform by as much as 9.5% in the coming 15 years.

It’s worth noting that the economy is highly dependent on trade and that, in contrast to the euro, the pound operates without the protection of a solid current account position. With the potential to fall a further 5-10%, sterling is thus left hugely exposed as we move into a period of major change for the UK’s network of trading relationships.

As far as its impact on the domestic economy is concerned, this is something of a double-edged sword: good for exporters but bad for consumers, whose spending power will likely weaken due to the effect of a short-term burst of higher inflation as import prices increase.

While there may be a backdrop of solid economic data, sterling remains vulnerable due to the current account position of the UK, which runs a deficit of about 7% of GDP – by far the largest in the G20 and, historically, the largest on record.

This deficit reflects, in the simplest terms, the fact that importers have to sell sterling in order to acquire the foreign currency that pays for goods and services sourced overseas.

As a result, a huge amount of sterling flows into foreign currency markets due to the sheer volume of UK imports in relation to exports. This, in turn, makes sterling’s value in the foreign exchange markets heavily reliant on the purchase of UK financial assets by overseas investors, who have to then swallow the loss.

Without these purchases, the value of sterling would fall even further. BoE Governor Mark Carney aptly captured this sense of vulnerability in his pithy comment about sterling relying on the ‘kindness of strangers’.

Sterling consequently now appears more vulnerable than any other major currency to investor sentiment.

In search of reasons for the pound’s recent plunge, the early October announcement by Prime Minister Theresa May that Article 50 of the Lisbon Treaty would be signed by the end of the first quarter of 2017 surely helped focus investor sentiment on the actual exit event.

Brexit now looks likely to happen no later than the second quarter of 2019 – although, subject to agreement with the rest of the EU, the deadline could conceivably be extended. Given the current rhetoric from key EU politicians, however, there are few signs that the bloc’s attitude to negotiations will soften.

It’s little wonder that markets are increasingly fearful.

Indeed, sterling’s recent plunge may prove just a harbinger. Today, the UK could well be enjoying the relative calm before the real storm that lies ahead.

Don Smith serves as London-based Chief Investment Officer at Brown Shipley, a member of KBL European Private Bankers. The statements and views expressed in this document are those of the author as of the date of this article and are subject to change. This article is also of a general nature and does not constitute legal, accounting, tax or investment advice.

The post Brexit: Sterling appears more vulnerable than any other major currency appeared first on International Finance.

TeleTrade

July 21, 2015: Every day, thousands of trades are conducted between traders around the world, but – let’s face it – most of them will never be remembered. The trades that stay in history have to be truly epic. A really incredible trade occurs when a brilliant person uses all their intelligence, intuition and creativity to find just the right moment to strike, sometimes against all odds, against all logic. Fortunes are made during crashes, collapses and crises or just by being the first to foresee a truly spectacular opportunity.

TeleTrade has compiled a list of trades throughout history that have all these qualities to be considered as the greatest trades of all time.

Join us to get inspired.

#1 Jesse Livermore’s shorting the Great Crash of 1929

Jesse Livermore is a legendary speculator, famous for correctly predicting the 1907 and 1929 stock market crashes. The Great Crash of 1929, which signaled the beginning of the 10-year Great Depression, was the 20^th century’s most important economic event. After predicting the end of a period when US assets were booming in value, Livermore decided to short almost the entire stock market. That trade bagged him about $100 million, which is equivalent to over $1.4 billion today. He is considered an innovator in the art of speculation and world’s top traders swear by the ‘Reminiscences of a Stock Operator’, a book based on his trading philosophy and career.

#2 Paul Tudor Jones’ call on the Black Monday in 1987

Through the use of technical analysis and historical S&P data, Paul Tudor Jones predicted that the stock market was going to crash in 1987 and proceeded to massively short stocks. His analysis was based on the facts that stocks had returned over 40% in seven months and were overextended, international stock markets were falling and portfolio insurance was gaining momentum. These factors sent the stock market into a selling frenzy, with the Dow Jones Industrial Average plunging 22% – the largest single-day decline ever, and Jones tripling his money, with a $100 million profit.  Shortly after, PBS released a documentary about Paul Tudor Jones, titled ‘Trader’.

#3 George Soros’ bet against the sterling

George Soros remained in history as ‘the man who broke the Bank of England’, as he placed an iconic short trade in 1992 that made him a Wall Street legend. Soros believed that interest rates in the UK were too low and inflation was too high. He, also, felt that it was a mistake for the UK to join the European Exchange Rate Mechanism – a body aimed to unify EU economies –, as it would injure the sterling in the long run. So, he shorted a staggering $10 billion worth of British pounds. The enormous selling pressure pummeled the sterling, forcing the UK to leave ERM and forming a new currency regime for the country. Soros made $1 billion from that trade, which was an inconceivable amount back then.

#4 John Paulson’s deal against subprime mortgages

Few people predicted the real estate bubble burst in 2007, and even fewer got the timing just right. John Paulson was one of them. Banks were giving loans to individuals who could not afford to repay them, and these defective mortgages were backed by worthless derivative contracts, named credit default obligations (CDOs). Paulson saw the fragility of the situation and bet heavily against them. What he did was persuade banks to issue credit default swaps (CDSs) that shorted CDOs, and then proceeded to buy as many as possible. Then, he just waited for the market to collapse and cashed in. Paulson’s hedge fund netted around $4 billion on the bet, rendering it the top performing fund during one of the most severe crises in the US history.

#5 Jim Chanos shorting Enron

Jim Chanos is considered as one of the top short-sellers in the world. After thorough research, he correctly predicted the demise of Enron and made a killing out of it. Chanos began to dig into Enron as early as 2000. When he spotted red flags in the company’s accounting practices, he looked into the company deeper, revealed more discrepancies, informed the media, planned his short position and ultimately got rich, when the Enron scandal was exposed in October 2001. The Enron scandal had an enormous impact, as it was the biggest bankruptcy so far, which also resulted in the dissolution of the Arthur Andersen accounting firm (among the ‘Big Five’ at the time) and the introduction of new regulations.

#6 Jim Rogers’ early call on commodities

Back in the 1990s, commodities were in a long bear market. Jim Rogers saw the advent of a bull market from far away and made a bet that it will remain strong for a decade and more. So, he created the Rogers International Commodity Index in 1996 and put his effort into making it investable. From 1998 till the end of 2010, that index had consistently returned 209%, compared to the S&P 500 that returned 10%, during the same period. Rogers still argues that the commodities market will remain bullish, as paper assets become worthless and demand for certain commodities become stronger. If this turns out to be correct, the significance of his call will be tremendous.

#7 John Templeton shorting the dot-com bubble

Legendary investor Sir John Templeton was a veteran in making short trades. He made his best and biggest trade ever eight years before his death in 2000. Right before the dot-com bubble burst, he shorted a basket of internet stocks, describing it as the easiest money he ever made. What he did was sell all his stocks just before the post-IPO six-month lock-up expiry, when a bunch of newly created tech millionaires sought to cash out. That move made him $80 million in a few weeks. Another bet that Templeton is famous for is putting $100 each in 104 NYSE stocks that were trading under $1 in 1939. In four years, his portfolio quadrupled and made profit on 100 out of the 104.

#8 Andrew Hall’s prediction on oil

In 2003, when the price of oil was trading at $30 per barrel and the world had just recovered from the dot-com bubble, Andrew Hall bet that oil would climb to $100 within five years. When the price of oil skyrocketed above $100 million in 2008, Citigroup – which was Hall’s employer – made a fortune and Hall bagged $100 million. Hall prepared the contracts in a way that if the price of oil did not reach $100 within five years, they would expire with no value. Thus, it took guts and a brilliant analysis from Hall to conduct that trade. The importance of his bet lies on the fact that not only did he foresee the direction of the price and spotted a good entry point, but he also determined the time frame and the move’s price level.

#9 David Tepper’s long call on major banks

In early 2009, after the financial crisis showed its face and everyone thought the financial system was falling apart, David Tepper – an expert in distressed assets – made one of the best trades of the recession. With impeccable timing and detailed analysis, he bought huge quantities of the severely depressed stocks of Citigroup (C) and Bank of America (BAC). At the time, there was a lot of concern that these banks would be nationalised. A few months later, at the end of the year, Citigroup tripled and Bank of America quadrupled in value from their earlier lows, earning Tepper’s hedge fund a $7 billion profit.

#10 Louis Bacon’s prescient bet on the Iraq war

Louis Bacon is famous for beating the CIA, the US president and other top government officials in predicting that Saddam Hussein would invade Kuwait back in the 1990s. So, he went long on oil and short on stocks and gained his hedge fund a return of 86%, as global oil supply froze, oil spiked and stocks plunged. Bacon, also, predicted that the US would quickly defeat Iraq and that the oil market would recover. His accurate predictions on market events around the Iraq war earned him numerous investors from all over the world and his hedge fund a 35% annual return for 13 consecutive years.

The post Top 10 most epic trades of all time appeared first on International Finance.

May 12, 2015: A £1billion infrastructure project that will link Battersea to the London Underground is another step closer due to a pioneering new method of financing agreed between the GLA and Lloyds Bank Commercial Banking. On May 11, they confirmed that the United Kingdom’s first ever Consumer Price Index-linked Sterling bond has been issued in a £200m deal that will contribute to the cost of the new Tube link.

The bond was developed by Lloyds Bank Commercial Banking and is a first in the Sterling bond market. It has enabled the GLA to raise finance in the most cost effective manner, and by taking this approach the Authority is expected to deliver the best possible value for Londoners by potentially saving up to £40m over the next 25 years.

An extension to the Northern Line is essential to the regeneration of Vauxhall, Nine Elms and Battersea and will lead to the creation of 24,000 jobs and 18,000 new homes.

Working with Lloyds Bank Capital Markets team, the GLA was able to hold a competitive dialogue with Sterling institutional investors and concluded that it was better value-for-money to issue bonds linked to CPI, rather than the traditional Retail Price Index.

The Mayor of London, Boris Johnson, said, “This deal demonstrates the continuing lure of London to investors with an eye for a world-leading transaction. These wise heads realise the incredible potential of our city and my team will draw on every possible source of funding in order to ensure the mega infrastructure projects we need to continue to thrive are able to move off the drawing board and into reality.”

James Garvey, Managing Director, Head of Capital Markets at Lloyds Bank Commercial Banking, said, “We are delighted to have led this milestone transaction for the GLA. The bond was structured to meet the financing requirements of the GLA drawing on demand from the growing volume of CPI-linked liabilities in the UK pension industry. In securing first mover advantage, the GLA has raised finance at a very competitive cost. This transaction is a great example of our Helping Britain Prosper plan in action, in which we have committed to support £30 billion of infrastructure projects in the National Infrastructure Plan by 2017.”

Tom Pearce, Managing Director at Rothesay Life, said, “Lending to high quality institutions such as GLA is core to Rothesay Life’s low risk asset strategy and we are delighted to have made this investment in London infrastructure.”

Securing funding through a cost effective bond issuance programme has become increasingly important to UK local authorities as they look at alternatives to the traditional funding route of the Public Works Loan Board (PWLB). This is the GLA’s second bond issuance via Lloyds Bank after an inaugural £600 million issuance in 2011 to part fund the CrossRail project.

The bond issue, which will pay the investor a CPI-linked coupon of 0.34%, is expected to save the GLA £40million over the next 25 years.

Also Read:

Luxury property market on an upswing in US

Argentina sues and suspends Citibank

The post London secures £200 mn for extension to Northern Line appeared first on International Finance.