Over the last year Winterflood has worked with the DMO and the wider GEMM market to provide access to new issue GILTs. In 2024 we have provided retail primary market access to all four new fixed rate GILTS and in the process, we’ve worked with investment platforms to help them understand the mechanics of auctioned and syndicated GILTS. GILTS are one of the few sources of listed fixed income bonds that retail can readily access and trade at the moment.

But there is another market that uses low denominations and which typically (and importantly) have a retail target market – that’s the supranational bond market. In the last few weeks, following work with a number of market counterparties, Winterflood has facilitated access to and is making markets in over 26 AAA rated Sterling £1k denomination supranational bonds for the likes of EBRD, IADB, IDA, IFC, NIB. The supranational bond markets is established and liquid, but until now, it’s not been accessible for retail platform investors and other intermediaries who settle in CREST.

Michael Smith, Head of Debt Capital Markets, Winterflood said, “we started looking at this market last year after the 2023 LSE DCM forum where the IADB (Inter American Development Bank) talked. The IADB, like many supranationals, has Sterling issuance in £1k denominations that specify retail as a target market. The problem we faced was that most of the bonds we looked at weren’t easy to set-up for settlement in CREST. It’s taken time to work through these CREST enablement issues with counterparties - but it’s done. One year on and at the LSE DCM forum earlier this week, the SSA panel discussion covered the inclusion of retail investors. To do that, you need a market. We’ve kicked-started accessibility for investors and issuers – we’re showing how it can be done.

“Now that we’ve got these SSA bonds in CREST, we’re making markets in them and they are now available in the same way as GILTS. Supranational bonds are an existing asset class – for me, they’re an interesting new option for retail. The investors I have talked to like them because they are a liquid alternative to GILTS, they are better rated and yields can exceed those on the equivalent GILT. These issuers also tend to have very strong social purpose too.

“What we have wanted to achieve here is to make every bond that has been designed for retail, available to them. We’ve shown that the market plumbing can work and that we are willing to make markets. The next step here is retail inclusion in new issuances and taps – it has worked well with GILTS.”
 

If you would like to discuss the article or topic in more detail, please contact: Michael Smith, CFA, Debt Capital Markets at Winterflood Securities.