61. There is no example of an instrument which has all the characteristics of a Gilt but was issued to fund a particular project. The only other public bond issues which carry an explicit Government guarantee are those by GEFCO. When the first GEFCO bonds were issued it was the aim of the underwriters to structure them to be as Gilt-like as possible. Although the GEFCO issues are relatively small, when the 2010 issue was first launched in 1989, it was one of the largest single tranche issues in the market. It was launched at around +40 basis points spread to Gilts, and was issued on an underwritten basis. The arguments for the GEFCO spread were:
a) the bond was a GGB but not a Gilt;
b) it was implicitly, not explicitly, AAA rated;
c) a lack of liquidity in comparison with Gilts.
62. GEFCO bonds continue to trade at a discount to Gilts. This feature, that the GGBs trade at a discount to Treasuries, is common to other bond markets. A useful comparison is perhaps the bond issuance of Öresundskonsortiet. This is the vehicle set up to fund the bridge between Sweden and Denmark and its bonds carry explicit guarantees from both the Kingdoms. A SEK1Bn Öresund was issued at 10 years in Swedish Krona this year at SEK Treasuries + 50 basis points. Its bonds trade around these levels in all Scandinavian currencies. In Canada, there are several Crown Agencies which have the same status as Canadian Treasuries in terms of their claim on the Consolidated Fund. They currently trade at spreads of 12 to 15 basis points above Canadian $ Treasuries.