A&O, Linklaters land roles on 50-year inflation-linked bond

Linklaters land roles on 50-year inflation-linked bond” />Allen & Overy (A&O) and Linklaters have been awarded lead roles on the UK Government’s landmark issue of a 50-year inflation-linked bond.

The bond issue is the world’s first inflation-linked note, or ‘linker’, with a 50-year maturity. The linker is also the first time the Government’s Debt Management Office (DMO) has mandated a bank syndicate to sell a UK gilt instead of using its normal auction process. The linker follows the sale of a 50-year conventional gilt issued by the DMO in July.

Four banks have been chosen as joint bookrunners, along with a further 10 banks acting as co-managers for the bond. Barclays Capital, Morgan Stanley, Royal Bank of Scotland and UBS have started the book building process and the bond priced last Thursday (22 September) with a nominal issue amount of £1.25bn.

The bank syndicate is being advised by Linklaters, led by capital markets partner Jane Brown.

The gilt carries a coupon of 1.25 per cent.

A&O has been instructed by the DMO to advise it on the 50-year linker. The magic circle firm has a longstanding relationship with the DMO, working as the office’s sole outside counsel for gilts issues.

Geoff Fuller, who is leading the A&O team, said the bond incorporates a new methodology for recording inflation. For previous inflation-linked bonds from the DMO, the measurement of inflation was normally based on an eight-month lag. The 50-year linker will be the first measure of inflation based on just a three-month lag, with the aim of increasing the potential pool of investors.