Distribution via syndication rather than auction
In addition to the prospect of earning fees, it is the rarity of syndicating pure UK government risk that makes this a highly prestigious mandate to win. The last syndicated UK government deal came through the auspices of the Debt Management Office – the £1.25 billion 50-year index-linked sold in September 2005 via Barclays, Morgan Stanley, RBS and UBS. Until that point the DMO had always preferred auctions, but after it suffered a mixed result on an ultra-long-dated fixed-rate deal sold earlier that year, it turned to syndication in an attempt to get a better result.
The last time a similar deal was done was way back in June 2003. The Bank of England sold $3 billion of five-year paper on behalf of the UK government, which wanted to fund foreign currency reserves, via Deutsche Bank, Citigroup, Goldman Sachs and Morgan Stanley. The fact that no UK banks managed to get on the top line was highly notable. The Bank of England argued at the time that it chose its lead managers purely on the quality of the advice given. It managed to obtain the funding for the Treasury cheaper than through the issuance of gilts.