LCH.Clearnet is the first clearing house to offer a clearing service for euro-denominated Explicit Government Guarantee Bonds (EGGBs), as part of the RepoClear service.
In Q4 2008, European governments began guaranteeing bonds, issued by financial companies, as a means of restoring funding to the financial sector. The market for these bonds, known as EGGBs, has grown rapidly, driven by investor demand for quasi-government debt coupled with relatively attractive returns.
EGGBs are guaranteed by a European national government and issued as part of that national government’s guarantee scheme. The list of bonds eligible for clearing within the RepoClear EGGB segment includes bonds issued under the national government guarantee schemes of Germany, UK, France, Austria, Portugal, the Netherlands and Ireland. The explicit government guarantee afforded to these bonds enables LCH.Clearnet to classify them as Agency Bonds within RepoClear’s International Bond segment.
“The extension of the RepoClear service to include EGGBs highlights our commitment to support the European government and quasi-government bond markets,” says John Burke, director, Fixed Income. “The continuing focus on minimising counterparty risk is driving an unprecedented interest in our services.”
L.D.