UK Sovereign

The UK Municipal Bonds Agency on Tuesday withdrew a planned bond sale for Warrington Borough Council as a result of the Public Works Loan Board’s decision last week to cut its lending rate by 100bp. Warrington will have to reconsider what is its best funding option.

In calls with the UK Debt Management Office on Monday, the majority of Gilt-edged Market Makers (GEMMs) and some Gilt investors called for the UK to launch a new conventional bond maturing in either 2046 or 2051 via syndication next month.

UK government borrowing is rocketing, with the country intending to borrow £485.5bn in its 2020/21 financial year. This has already pushed up its debt to GDP ratio over 100%, but the announcement of next quarter’s £92bn remit caused scarcely a ripple in the Gilts market on Wednesday. Market participants believe that any problems of debt sustainability or spiralling inflation are too distant a prospect to trouble them, writes Lewis McLellan.

The UK government said that it will not compensate holders of index-linked Gilts following the reform of the Retail Price Index (RPI) measure of inflation, which is expected to be enacted no earlier than 2030.

The UK government tightened guidance for local authority borrowing on Wednesday, in a bid to stymie the riskier borrowing-to-invest models certain UK councils have adopted over the past decade.

The UK Debt Management Office provided an update to its funding programme following the Spending Review and the Office for Budget Responsibility’s Economic and Fiscal Outlook on Wednesday.

The UK Municipal Bonds Agency is set to come to market for its third bond ever — this time, on behalf of Warrington Borough Council.

Boris Johnson, UK prime minister, announced on Tuesday night a 10 point plan for the environment, including phasing out petrol cars by 2030. But policy specialists are disappointed that the plan lacks financing commitments and especially that there is no announcement of a national investment bank.

Giving cheap loans with few restrictions to local authorities via the Public Works Loan Board is not a suitable replacement for central government funding. This must change, or London Borough of Croydon will only be the first council to fall into insolvency.

Will Sir Robert Stheeman become the Green Knight?

The UK’s announcement that it would begin issuing green Gilts next year is raising hopes that it will inspire more green bond issuance from UK borrowers. But market participants are eager to see how the UK handles setting up a green debt programme and its own green taxonomy. Lewis McLellan and Jon Hay report.

The UK will issue its first green Gilts next year, create its own Taxonomy of green activities and oblige large companies and investors to report as recommended by the Task Force on Climate-Related Financial Disclosures by 2025, the chancellor of the exchequer Rishi Sunak said on Monday.