Jersey Bond issue set to tap $100trn market
An FT story caught my eye this evening with the headline "Jersey launches first sovereign bond to strong demand" It appears the attractions of the Jersey Bond issue designed to fund long term social housing capital projects has been recognised by the market.2 June 2014
The headline coupon is in fact 3.75% for forty year money and not the 4.25% quoted in the FT, and given the indication that demand is high it could come in even lower.
Given also that 30 year Gilts were yielding 3.43% at close of business this evening, this would be an incredibly strong showing and a significant market vote of confidence in the long term future of the jurisdiction and its finance industry, the main source of Government revenues.
Of course with the inflation outlook subdued, and the continuing prospect of historic low interest rates, demand for quality bond issues is high. That said, getting a bond issue away at near big league sovereign rates is a fantastic achievement for a small jurisdiction, and testament to the underlying strength of public finances, and the strong fiscal and net asset position of Jersey as a jurisdiction.
Bear in mind Jersey runs balanced budgets, has no annual fiscal deficit, and no short term debt, it looks an increasingly canny move to tap into long term debt markets whilst base rates are at a 315 year low. Even the bond market granddaddy of them all, the US 30 year Treasury is yielding 3.37% at the moment.
Sound public finances, a stable well run government and a world beating finance industry clearly count for a lot, even in todays volatile markets.