States of Jersey in talks with banks over bond issue

Wed Feb 12, 2014 11:25am EST

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LONDON, Feb 12 (IFR) - The States of Jersey is set to return to the international capital markets for the first time in 50 years in the next couple of months, taking advantage of historic low rates to raise GBP250m for investment in the channel island's social housing stock.

The UK crown dependency is in advanced discussions with banks ahead of an upcoming bond issue, said a source with knowledge of the discussions on Wednesday.

Jersey has tended to fund most of its capital investment out of taxes, but in its 2014 budget, published in October last year, treasury minister Philip Ozouf set out plans to tap the markets.

"The only debt we are taking is wise debt taken at long term historic lows for housing," he said following the announcement.

Despite being viewed as a haven for wealthy tax-avoiders, Jersey's islanders have faced rising unemployment in recent years as its economy shrinks.

When the UK moved to close a loophole in VAT rules for online retailers in 2012, businesses such as Amazon and Play.com closed warehouses on the island, putting thousands out of work.

In late November, Standard & Poor's gave the States of Jersey a AA+ rating, after advice from law firm Ernst & Young. That has paved the way for the independent bailiwick, which is not part of the United Kingdom or European Union, to go ahead with the bond issue, likely to be priced at a small premium to UK rates.

Ozouf could not be immediately reached for comment. (Reporting by Christopher Spink; additional reporting by John Geddie)

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