Bond Issuance: Raise up £250 millon for housing purposes: Approval of timetable

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A decision made 11 March 2014:

Decision Reference: MD-TR-2014-0017
Decision Summary Title:	Approval of Bond Issuance Timetable		Date of Decision Summary:	10 March 2014
Decision Summary Author:	Head of Shareholder Relations		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Approval of Bond Issuance Timetable		Date of Written Report:	10 March 2014
Written Report Author:	Head of Shareholder Relations		Written Report : Public or Exempt?	Public
Subject: Approval of the planned timetable for the forthcoming States of Jersey’s Bond Issuance to raise up to a maximum of £250 million for Housing purposes.
Decision(s): The Minister decided to approve the timetable for the forthcoming Bond Issuance by the States of Jersey. The intention is to commence the Investor Roadshows in Jersey, London and Edinburgh in the week of 26th May 2014. By this date, the 2013 Financial Report and Accounts will have been signed and the Standard and Poor’s will have published their half yearly outlook for the States of Jersey’s rating, in order to provide prospective investors with up to date information.
Reason(s) for Decision: On 22 November 2013 the Minister communicated the high level credit rating Standard and Poor (S&P) awarded to Jersey for a long term issuer of AA+. This strong credit rating will support the forthcoming bond issuance. On 5 December 2013 the States approved the 2014 Budget (P.122/2013), which included the approval to borrow up to a maximum of £250 million for Housing purposes. The budget included details of the key roles required in order to carry out a public rated bond issuance. On 24 February 2014 the Minister announced for the appointment of 3 book runners and two legal advisers (MD-TR-2014-0013). The Minister wishes to communicate the decision on the timing for the future Investor roadshow for the States of Jersey’s debut bond issuance, ensuring key decisions in relation to key milestones are communicated in an open and transparent manner.
Resource Implications: None.
Action required: None.
Signature:		Position: Senator P F C Ozouf, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Bond Issuance: Raise up £250 millon for housing purposes: Approval of timetable

Treasury and Resources

Ministerial Decision Report

APPROVAL OF BOND ISSUANCE TIMETABLE

1. Purpose of Report

To enable the Minister to approve the planned timetable for the forthcoming States of Jersey’s Bond Issuance.

2. Background

Under the Public Finances (Jersey) Law 2005, the Minister for Treasury and Resources has responsibility to the States for the public finances of Jersey.

On 22 November 2013 the Minister communicated the high level credit rating Standard and Poor (S&P) awarded to Jersey for a long term issuer of “AA+ with a stable outlook.” This strong credit rating will support the forthcoming bond issuance.

On 5 December 2013 the States approved the 2014 Budget (P.122/2013), which included the approval to borrow up to a maximum of £250 million for Housing purposes. The budget included details of the process, indicative timetable and key professional support required in order to carry out a public rated bond issuance.

On 24 February 2014 the Minister announced for the appointment of 3 book runners and two legal advisers for the bond issuance process. Barclays Bank Plc.; HSBC Bank Plc. and The Royal Bank of Scotland Group Plc. were appointed as Joint Lead Managers (Book Runners). Clifford Chance LLP and Carey Olsen were appointed as Legal advisers for the bond issuance.

Ernst & Young’s capital markets team have provided advice to the Treasury throughout the process.

3. Factors impacting the dates proposed in the Timetable

The following factors have been considered when proposing the timetable set out in Section 4 of this report:-

Clifford Chance LLP, the Legal advisers appointed on 24 February 2014 subsequently advised that for the States of Jersey’s debut issuance prospective investors be given the most up to date information available before commencing the Investor Roadshows, for the States of Jersey’s Financial Report and Accounts for the year ended 31 December 2013.
PWC were approached as the external auditors and with the support of the C&AG it was agreed that the States’ Accounts could be signed on 12 May 2014 in advance of the statutory deadline.
On 27 February 2014 Standard and Poor confirmed that they would publish their latest half year outlook for the States of Jersey on 23 May 2014.
The three banks advising the States were consulted as were Ernst & Young as the independent financial advisers.
Consideration was also given to the UK Debt Management Office’s (DMO) planned UK Gilt Market issuance calendar for 2013-14, to ensure that the States of Jersey’s debut issuance does not coincide with the DMO’s timing for long-dated gilt issuances. This is a matter that Banks will have regard to when promoting Jersey’s bond to prospective investors but as the U.K. are so active in the market for gilts of different tenors (maturity dates) this is unlikely to be a major issue.
A further factor taken into consideration in the timing of the roadshow is the time needed for the United Kingdom Listing Authority (UKLA) to sign off the prospectus. Treasury is being advised on this aspect by Clifford Chance LLP.

The Timetable

The following key milestones which have been achieved so far:-

Key Milestones	Date
2013
States Approve Budget 2014 (P.122/2013)	05/12/13
2014
States approves Draft Public Finances (Amendment of Law No.1) (Jersey) Regulations 2013 to increase Lending to 60% of the estimated income derived from taxation (P.133/2013)	22/01/14
Advertisement of tenders for the appointments of book runners and legal advisers	20/01/14
Tenders close for the appointments of book runners and legal advisers	27/01/14
Announcement for the appointment of 3 book runners and 2 legal advisers (MD-TR-2014-0013)	05/03/14

Future key milestone dates for the debut bond issuance are as follows:-


Key Milestones	Date
2014
Signing of 2013 Financial Report and Accounts for the States of Jersey	12/05/14
Standard and Poor publishes half yearly outlook for States of Jersey’s rating	23/05/14
Investor Roadshows in Jersey, London and Edinburgh	Week beginning 26/05/14
Cash receipt (As advised by the 3 banks and according to capital market conditions)	June 2014

For information, Standard and Poor have published their Sovereign Calendar for sovereign, regional, and local government ratings and related outlooks as required by the European Union Regulation (the "EU CRA Regulation") on credit rating agencies (Regulation (EU) No 1060/2009, as amended by Regulation (EU) No 462/2013). They have nominated two rating dates for Jersey in 2014 being the 23 May 2014 and 21 November 2014.

Recommendation

The Minister is recommended by the Treasurer to approve the timetable for the forthcoming Bond Issuance by the States of Jersey.

Financial and Resource Implications

Resource and financial implications associated with this decision were documented in the 2014 Budget.

Report author : Head of Shareholder Relations	Document date : 10 March 2014
Quality Assurance / Review : Treasurer of the States	File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2014-0017 - Communication of Bond Issuance Timetable\WR - Communication of Bond Issuance Timetablev4.docx
MD sponsor : Treasurer of the States