States of Jersey 2014 Bond Issuance: Appointment of 3 Lead Managers and Legal Advisers

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A decision made 24 February 2014:

Decision Reference: MD-TR-2014-0013
Decision Summary Title:	Appointment of joint lead managers and legal advisers for the States of Jersey 2014 Bond Issuance		Date of Decision Summary:	24 February 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:	Appointment of joint lead managers and legal advisers for the States of Jersey 2014 Bond Issuance		Date of Written Report:	24 February 2014
Written Report Author:	Head of Shareholder Relations		Written Report : Public or Exempt?	Public
Subject: Appointment of three joint lead managers and legal advisers 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 following appointments for the forthcoming Bond Issuance by the States of Jersey:- Barclays Bank Plc, London; HSBC Bank Plc , London and The Royal Bank of Scotland Group Plc, London to be appointed as Joint Lead Managers (Book Runners). HSBC will also act as the Principal Paying Agent and Trustee. Clifford Chance LLP and Carey Olsen to be appointed as legal advisers.
Reason(s) for Decision: 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 22 November 2013 the Minister communicated the high level credit rating Standard and Poor’s (S&P) awarded to Jersey for a long term issuer of AA+. This strong credit rating will support the forthcoming bond issuance. In accordance with Financial Direction 5.1 two separate open tenders and interview processes were carried out during January and February 2014 to appoint the joint lead managers and legal advisers. It is recommended that three joint lead managers be appointed in order to ensure that once the bond has been issued that there is strong secondary market liquidity. Bonds that are liquid and regularly traded are sought after and tend to attract tighter pricing, coupled with the fact it makes it easier for holders to sell these instruments in the secondary market.
Resource Implications: All resource and financial implications as documented in the 2014 Budget.
Action required: The Director of Procurement to arrange the preparation and signing of appropriate contracts.
Signature:		Position: Senator P F C Ozouf, Minister for Treasury and Resources
Date Signed:		Date of Decision:

States of Jersey 2014 Bond Issuance: Appointment of 3 Lead Managers and Legal Advisers

Treasury and Resources

Ministerial Decision Report

COMMUNICATION OF APPOINTED JOINT LEAD MANAGERS AND LEGAL ADVISERS FOR THE STATES OF JERSEY 2014 BOND ISSUANCE

1. Purpose of Report

To enable the Minister to approve the appointments of three joint lead managers and legal advisers 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 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 22 November 2013 the Minister communicated the high level credit rating Standard and Poor’s (S&P) awarded to Jersey for a long term issuer of AA+. This strong credit rating will support the forthcoming bond issuance.

Since December 2013, work has been underway to carry out appointments for the main roles identified for the Bond Issuance.

Ernst & Young’s capital markets team have provided advice to the Treasury throughout the process to date. They will continue to provide advice throughout the forthcoming bond issuance.

3. Outcome of the two separate open tender processes

In accordance with Financial Direction 5.1 two separate open tenders and interview processes were carried out during January and February 2014 to appoint the joint lead managers (Book Runners) and legal advisers.

The two tenders were very successful and a high standard of responses were received. Following the interview process the following organisations are recommended to be appointed:-

Barclays Bank Plc, London; HSBC Bank Plc , London and The Royal Bank of Scotland Group Plc, London to be appointed as joint lead managers (Book Runners). HSBC will also act as the Principal Paying Agent and Trustee.

Clifford Chance LLP and Carey Olsen to be appointed as legal advisers.

It is recommended that three joint lead managers be appointed in order to ensure that once the bond has been issued that there is strong secondary market liquidity. Bonds that are liquid and regularly traded are sought after and tend to attract tighter pricing, coupled with the fact it makes it easier for holders to sell these instruments in the secondary market.

Recommendation

The Minister is recommended to approve the following appointments for the forthcoming Bond Issuance by the States of Jersey:-

Barclays Bank Plc, London; HSBC Bank Plc, London and The Royal Bank of Scotland Group Plc, London to be appointed as joint lead managers (Book Runners).

Clifford Chance LLP, London, to be appointed as legal adviser, supported by Carey Olsen.

Financial and Resource Implications

All resource and financial implications were documented in the 2014 Budget.

Report author : Head of Shareholder Relations	Document date : 24 February 2014
Quality Assurance / Review : Treasurer of the States	File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2014-0013 -\WR -Communication of appointed Joint Lead Managers and Legal Advisers for the States of Jersey 2014 Bond Issuance.docx
MD sponsor : Treasurer of the States