Sterling bond sales have made their best start to the year since before the financial crisis with a 42 per cent jump from the same period in 2011.
Sales have soared to $79.5bn so far this year, indicating that the UK’s bond market remains robust despite the eurozone’s sovereign debt crisis.
This is largely thanks to its status as a relative haven, the Bank of England’s quantitative easing and a stable of large fund managers with deep pockets for sterling-denominated issuance of most maturities.
Although UK government bond yields have edged up this year, the sharp improvement in investor sentiment – driven by easing pressures in the eurozone financial system – has ensured that sterling bond sales have continued at a healthy clip.
“It’s definitely benefited from being slightly removed from the European situation – it’s a well-liked currency,” said Marco Baldini, head of European corporate debt syndicate at Barclays, the biggest arranger of sterling bonds so far this year.
The sterling market has also benefited from its ability to soak up almost any bond maturity up to 30 years, which has attracted a wide variety of international issuers.
“The proportion of non-UK issuers has become much higher in recent years,” Mr Baldini said. “In terms of delivering bespoke maturities, you can’t beat sterling.”
Government and government-related entities have dominated, selling a record $36.4bn so far this year, according to Dealogic, but companies have also rushed to the market.
Sterling-denominated corporate bond sales have hit $17.7bn so far this year, a 52 per cent increase compared with the same period last year.
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