■ The Government-guaranteed bonds (GGBs) were launched around the time when the long gilt market was at its highest (in price) for the 12 months around February 1999.
■ The spreads on the GGBs were narrower than any other comparable AAA/Aaa Eurobond being issued around that time, and despite strong arguments from investors that they should have been wider.
■ The launch of the GGBs was a success. Management of the market (previously critical of the process) improved significantly following a move away from the option of auctioning the bonds.
■ In our view, structuring the GGBs as a quasi- or hypothecated Gilt would have achieved a tighter spread (though still a spread premium to the main Gilt market). However, it would not have been possible to structure an issue eligible for the FTSE Gilt Index but still off balance sheet for the Government.
■ If the bonds had been quasi-gilts, it is possible that more of the 2038 date bond could have been sold, possibly improving the economics of the project.
■ We consider that the book building process was the best route to follow in terms of stimulating competitive interest in the bonds, monitoring the progress of the placing and managing the Gilt market. It was also the cheapest viable route in terms of fees.