"Three deals on the screens this morning an exceptional quantity!" exclaims the global origination manager at a Dutch investment bank. Eurosterling issues have already delivered £8.5 billion this year. Following a record 1996, when total issuance was £34.6 billion, Eurosterling looks set to surpass gilt (UK government bond) issuance in 1997.
The recent growth in the number of Eurosterling deals is matched by increased investor sophistication. On February 12, Fannie Mae (the Federal National Mortgage Association) issued the very first global sterling issue. Worth £1 billion, it is the largest ever single-tranche transaction. A market for corporate debt has also developed this year. Of the 55 issues so far in 1997, 20% have been corporate paper an unusually high proportion. According to Frank Kennedy, executive director responsible for UK debt capital markets at SBC Warburg, this is "the most notable feature of Eurosterling".
Eleven corporates have already done Eurosterling issues this year, compared with a total of 18 in 1996. Traditionally, Eurosterling has been dominated by a few frequent borrowers, usually sovereign or financial institutions. Corporate paper has been rare and issued as much for prestige as for financing.