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Why crowdfunding threatens traditional bank lending
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October 2005
by Alex Chambers & Mark Brown
The UK Debt Management Office's syndication of its £1.25 billion, 50-year index-linked bond last month is an understandable strategy. The DMO did not want a repeat of the unenthusiastic response to its conventional 50-year auction in May. But while the deal went smoothly, it left some questions about very long-dated linkers unanswered. Firstly, there is the matter of pricing. Books opened with indicative price guidance at 14 basis points to 19bps below the 2035 index-linked gilt. The book grew to £1 billion in four hours and eventually exceeded £2 billion on day two, when price guidance was tightened to 17bps to 19bps below the 2035. It finally priced...
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