Yahoo Finance 
Market eagerly anticipates sale of UK linker
By Melissa Song Loong
LONDON, Jan 18 (IFR) - It is still full speed ahead for sterling issuers in the SSA market, with all eyes on the UK's last issue of the fiscal year, which is expected to hit the market in the coming weeks.
Details on the 30-year index-linked syndication will likely be announced in the next few days, with the DMO needing to raise £3.5bn-£4bn to meet its requirements.
"We won't get the next quarter's remit until post-budget in March, so you might find that the next syndication doesn't come until late June or early July," said Craig Inches, head of short rates and cash at Royal London Asset Management.
"We expect demand to be fairly robust. Pension fund demand and the bid for global inflation assets is pretty strong."
But for investors, UK inflation-linked products continue to look expensive.
"The market is not good at predicting where inflation is going to be a long way into the future," said John Taylor, fixed income portfolio manager at AllianceBernstein.
"There is a structural shortfall in supply of long-dated index-linked Gilts, which partly explains why they are expensive."
LARGEST STERLING DEAL
Other SSA sterling issuance is coming at tight levels, with the World Bank this week taking advantage to raise £1.25bn in a five-year deal.
The transaction was priced at 27bp over the 1.75% Sep (Shanghai: 600021.SS - news) 2022 Gilt, with a coupon of 1%. It drew over £1.5bn in orders via leads Barclays (LSE: BARC.L - news) , HSBC and NatWest Markets.
The deal is the World Bank's largest sterling print ever.
Caisse des Depots et Consignations went for a more modest size, of £250m. The no-grow attracted orders of £700m.
Leads NatWest Markets, RBC and TD set the spread at 36bp over the 1.5% Jan 2021 Gilt.
Away from sterling, the International Finance Corporation set the spread at 1bp through mid-swaps for its US$2bn no-grow three-year.
Books were over US$3bn, and Bank of America Merrill Lynch, Citigroup (NYSE: C - news) , JP Morgan and TD were lead managers on the SEC (Shanghai: 603988.SS - news) -exempt deal. (Reporting by Melissa Song Loong, editing by Sudip Roy, Philip Wright)
