Friday 12 December 2014
Not for distribution, directly or indirectly, in or into the United States, Australia, Canada, Japan or any other jurisdiction where to do so would be unlawful.
Following a States' decision to go ahead on 31 October 2014, a team from Treasury and Resources conducted a successful four-day investor roadshow in Guernsey, London and Edinburgh. The bond issue was over-subscribed, showing a strong level of investor interest, which enabled the States of Guernsey to secure a fixed rate of interest of 3.375% per year, with a final maturity of December 2046. This represents the lowest ever coupon for a long-term fixed rate sterling bond from any issuer without a UK Government guarantee.
The States had been working with external partners Ernst & Young who acted as Independent Financial Advisors; Clifford Chance acting as international counsel and Carey Olsen as Guernsey counsel who worked alongside lawyers from the Law Officers of the Crown in preparing for the States of Guernsey's debut bond issuance.
At the beginning of November, the Treasury & Resources Department appointed three banks (Barclays Bank PLC, Deutsche Bank AG and RBC Capital Markets) to act as joint lead managers ("JLMs") for the States' debut bond issuance. Allen & Overy were appointed as international counsel and Mourant Ozannes as Guernsey counsel to the JLMs.
The Barclays Guernsey Island Director, Ken Bradley, said:
"Barclays was delighted to be entrusted with this prestigious debut bond mandate for the States that underscores Barclays' commitment to the Island which stretches back over 90 years. The Guernsey team did a fantastic job of differentiating themselves and explaining their credit on the roadshow. Investors were quick to recognise the strength and resilience of the economy, stable governance and diverse financial sector. This led to strong interest from investors in the days following the roadshow. This positive momentum allowed them to achieve a fantastically low coupon."
The net proceeds of the bond issue will be applied primarily to consolidate existing debt which is currently either directly provided or guaranteed by the States of Guernsey.
Treasury and Resources Minister Deputy Gavin St Pier said:
"Our excellent credit rating, along with the opportunity to borrow funds at historically low-levels of interest, made this a very good time to act swiftly on the States Assembly's decision to approve the issuing of a bond.
The bond issuance is not about raising money to spend on public services. It is about refinancing more cost-effectively our States related trading entities, all of which have income streams to support their own borrowings. It will help us make sure our assets work even better for us, and ensure that the borrowing we have is consolidated in a way that gets a better deal for the Island's taxpayers."
The Deutsche Bank Chief Country Officer for the Channel Islands, Andreas Tautscher, said:
"Deutsche Bank is delighted to partner with Guernsey on this historic bond deal. The record low cost of the bond is a vote of confidence in Guernsey by the international financial markets and a great opportunity to refinance existing debt at a lower interest cost. Deutsche Bank has been committed to Guernsey since 1972 and we look forward to continuing that long association."
Chris Blampied, head of Banking, British Isles for RBC Wealth Management, said:
"RBC is honoured to have been chosen to work with the States of Guernsey. The bond coupon is amongst the lowest ever achieved and is testament to the careful manner in which the team prepared and the coherent way in which the strengths of the economy were communicated to institutional investors."
-ENDS-
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