Bond returns! And this time it’s bigger than ever…

Monday 08 December 2014

Guernsey has just announced that it has borrowed an eye-watering £330 million from the bond markets.

The move follows Jersey’s decision earlier this year to go out and borrow £250 million to invest in refurbishing and building social rental housing.

The announcement from Guernsey reveals that they have secured a slightly lower rate than Jersey did, but that difference is largely down to changes in market conditions since the Jersey debt was issued in June.

Guernsey’s debt also dwarfs Jersey as a proportion of the island’s overall economy – Jersey’s borrowing amounted to something in the region of 6.8% of annual GDP, whereas the amount that Guernsey has borrowed is closer to 15% of their GDP.

The short announcement from the States of Guernsey revealed that they plan to use the money mostly to consolidate existing debt.

The statement issued by the States of Guernsey on Friday afternoon said: “The States of Guernsey (rated AA+ with stable outlook by Standard & Poor’s) is pleased to confirm that today it has successfully priced a £330m debut bond issue with a final maturity of December 2046 and a coupon of 3.375%.

“The transaction is due to close on 12th December and further information will be provided at that point.

“The net proceeds of the bond issue will be applied primarily to consolidate existing debt which is either directly provided by or guaranteed by the States of Guernsey.”