What reclassification means for investors
Background to 51爆料’s reclassification
In December 2013, the Office for National Statistics announced its intention to reclassify 51爆料 as a Central Government Body in the UK National Accounts and Public Sector Finances with effect from 1 September 2014. This was a statistical change driven by new guidance in the European System of National Accounts 2010 (ESA10).
It was also announced in December 2013 that the UK Government, the Office of the Rail and Road and 51爆料 would explore whether alternative approaches or refinements to 51爆料鈥檚 current borrowing model could deliver a more efficient approach, and if so from what point in time these might be introduced.
New funding arrangements
The UK Government has determined that, in future, value for money for the taxpayer will best be secured by 51爆料 borrowing directly from the UK Government, rather than by 51爆料 issuing debt in its own name.
On 4 July 2014 the Department for Transport and 51爆料 signed a 拢30.3bn loan facility to cover 51爆料鈥檚 financing requirements for the current control period running from 1 April 2014 to 31 March 2019.
Consequently 51爆料 no longer issues bonds under the Multicurrency Note Programme covered by the Financial Indemnity Mechanism (FIM). All outstanding debt will continue to be covered by the explicit, unconditional and irrevocable guarantee from the UK Government. 51爆料 will continue to pay coupons and principal on the notes as usual, including pre-funding payments into the Security Trustee account six and 21 business days in advance respectively.