News Release
Gilt-Edged Auction 8% Treasury Stock 2021
17 September 1996
The Bank of England announces the issue by Her Majesty's Treasury of a further £3,000 million of 8% Treasury Stock 2021, for auction on a bid price basis on Wednesday, 25 September 1996. The new issue will be fully paid and fungible with the stock already in issue, and will be strippable when an official gilt strips facility is introduced.
Interest on 8% Treasury Stock 2021 is payable half-yearly on 7 June and 7 December. Because this further issue of the stock will rank in all respects pari passu with the existing stock, being amalgamated with it immediately on issue on 26 September 1996, the price payable for the stock will include an amount equal to accrued interest since 7 June 1996, the last interest payment date of the stock, until the settlement date of this further issue, on 26 September 1996, at the rate of £2.43288 per £100 nominal of stock. This further issue of the stock will rank for the full six months' interest due on 7 December 1996. The stock will be repaid at par on 7 June 2021. The prospectus for this issue includes provision for exemption from United Kingdom taxation in favour of non-resident holders. As announced on 13 August 1996, interest payments will be paid to all holders of this stock without deduction of United Kingdom income tax with effect from 7 June 1997.
Under Rule 2.3 of the London Stock Exchange, dealings in the further issue of 8% Treasury Stock 2021 on a "when issued" basis may be conducted from the time of this announcement until the close of business on Wednesday, 25 September 1996. The SEDOL code to be used for "when issued" dealing in the new issue until the close of business on 25 September 1996 is 0-999-551: from that time onwards the SEDOL code should be that for the existing issue, ie 0-999-799. The EPIC code "AUC" should be used for trade reporting purposes.
The stock may be held on the National Savings Stock Register.
Bids may be made on either a competitive or a non-competitive basis.
(i) Competitive bids
The Bank of England reserves the right to reject any competitive bid or part of any competitive bid. Competitive bids will be ranked in descending order of price and stock will be sold to applicants whose competitive bids are at or above the lowest price at which the Bank of England decides that any competitive bid should be accepted (the lowest accepted price). Applicants whose competitive bids are accepted will purchase stock at the prices which they bid (plus accrued interest): competitive bids which are accepted and which are made at prices above the lowest accepted price will be satisfied in full; competitive bids made at the lowest accepted price may be satisfied in full or in part only.
Each competitive bid must be for one amount and at one price, excluding accrued interest, expressed as a multiple of 1/32nd of £1, and must be for a minimum of £500,000 nominal of stock. Unless the applicant is a member of the Central Gilts Office (CGO) Service, a CHAPS payment must be sent to the Bank of England to arrive not later than 1.30 pm on Thursday, 26 September 1996.
(ii) Non-competitive bids
The Bank of England reserves the right to reject any non-competitive bid. Non-competitive bids which are accepted will be accepted in full at the non-competitive sale price plus accrued interest. The non-competitive sale price will be equal to the weighted average of the prices at which competitive bids have been accepted, rounded down to the nearest multiple of 1/32nd of £1.
Only one non-competitive bid may be submitted for the benefit of any one person; a non-competitive bid, other than one made by a gilt-edged market maker, must be for not less than £1,000 nominal and not more than £500,000 nominal of stock, and must be for a multiple of £1,000 nominal of stock.
Each gilt-edged market maker may bid non-competitively for up to 0.5% of the stock on offer.
Unless the applicant is a member of the CGO Service, the amount payable with non-competitive bids will be £105 for every £100 nominal of stock applied for. If the non-competitive sale price, plus accrued interest, is less than £105 per £100 nominal of stock, the balance of the amount paid will be refunded. If the non-competitive sale price, plus accrued interest, is greater than £105 per £100 nominal of stock, a further payment may be required.
A member of the CGO Service may, by completing Section 3 of the application form, request that any stock sold to him be credited direct to his account in the CGO on Thursday, 26 September 1996 by means of a member-to-member delivery.
The Bank of England reserves the right to require evidence of the identity of any applicant for stock or of any person for whom an applicant is acting as agent. In addition if, for whatever reason, such evidence of identity is not provided within 21 days after the auction, the Bank of England may reject the application or cancel the sale of any stock, and take any other action it may think fit.
Cancellation of a sale of stock will not affect the non-competitive sale price or any other sale of stock.
The Bank of England may sell less than the full amount of the stock on offer at the auction.
The prospectus for competitive bids and non-competitive bids will be advertised in the Press. Application forms must be sent to the Bank of England, New Issues, PO Box 444, Gloucester, GL1 1NP to arrive not later than 10.00 am on Wednesday, 25 September 1996; or lodged by hand at the Central Gilts & Moneymarkets Office, Bank of England, Threadneedle Street, London not later than 10.00 am on Wednesday, 25 September 1996; or lodged by hand at any of the Branches or Agencies of the Bank of England not later than 3.30 pm on Tuesday, 24 September 1996. Bids will not be revocable between 10.00 am on Wednesday, 25 September 1996 and 10.00 am on Monday, 30 September 1996. Gilt-edged market makers may bid by telephone to the Bank of England not later than 10.00 am on Wednesday, 25 September 1996.
Government Statement
Attention is drawn to the statement issued by Her Majesty's Treasury on 29 May 1985 which explained that, in the interest of the orderly conduct of fiscal policy, neither Her Majesty's Government nor the Bank of England or their respective servants or agents undertake to disclose tax changes decided on but not yet announced, even where they may specifically affect the terms on which, or the conditions under which, this stock is issued or sold by or on behalf of the Government or the Bank; that no responsibility can therefore be accepted for any omission to make such disclosure; and that such omission shall neither render any transaction liable to be set aside nor give rise to any claim for compensation.
Notes to Editors
In accordance with H M Government's financing Remit to the Bank, issued on 27 March 1996, eleven auction sales are planned during the financial year 1996-97. Today's notice provides details of the sixth auction sale of the year.
The further £3,000 million issue of 8% Treasury Stock 2021 is fully paid and, from 26 September 1996, will be indistinguishable from the £6,000 million already in issue. This means that successful bidders at the auction will need to pay for the interest which has accrued, since the last interest payment on 7 June 1996, at the rate of £2.43288 per £100 nominal of stock; but also that the full six months' interest will be paid on 7 December 1996.
It was announced on 13 August 1996 that interest payments due to be paid on 7 June 1997 and thereafter on gilts intended to be strippable when a strips facility is introduced will be paid to all holders without deduction of United Kingdom income tax. Accordingly, they will also be exempt from the quarterly accounting arrangements which were introduced in connection with the start of the gilt repo market. This includes 8% Treasury Stock 2021.
The Bank has indicated that it will not sell stock in the maturity area surrounding the auction stock for a reasonable period after the auction, and will only do so if there is evident market demand for further such stock.
