Arranged by Barclays Capital, the deal follows the template of Juturna - an £813 million offering arranged by Morgan Stanley and closed in July last year - to finance the redevelopment of the BBC's London headquarters, by Land Securities Trillium.

The second deal is far smaller and avoids the monoline guarantee included in the first deal to tap demand for unwrapped paper.

The £129 million bond will allow the BBC to finance the development without raising debt directly. The BBC's charter limits its borrowing to £200 million. The two deals are classified as operating leases rather than financings, and therefore do not count towards that limit.

The deal is said to be substantially cheaper than it would have been for the developer, and it enables the BBC to spread the cost of the project over a tenor akin to asset life.

The finished site will have around 32,000 square metres and will provide accommodation and facilities for around 1,200 staff.

The deal securitises a 30-year fully amortising property development loan. Around £110 million of the proceeds will fund the construction work, purchase of the land, and the 150 year lease.

The rest will be used to cover interest payments to bondholders until July 2007, when the BBC will begin paying rent.

As with Juturna, the BBC takes all the construction risk by agreeing to make rental payments from a specified date, regardless of whether the construction is complete.

Work on the site should begin later this month and finish by July 2006.

Key credit factors are the BBC's ability to make rental payments, its financial strength and its close links to the UK government through its royal charter, which allows it to collect licence revenue. Licences accounted for 75% of the BBC's revenue in 2002/2003.

Charter renewal, both in 2006 and later on in the life of the bond, was the main focus of investors during roadshows. The current charter will run until 31 December 2006 - just over two years into the life of the deal - and Standard & Poor's noted that rapid changes to the BBC's remit and funding levels are unlikely. Gradual changes would give the BBC time to adjust.

The bond will begin amortising in 2009 and has a 23.4-year average life. It does not cover the purchase of technological equipment.

Barclays structured a single tranche rated Aa2/AA-/AA, priced to yield 78bp over the 6% 2028 UK Gilt. That offers an attractive premium to the first BBC deal, reflecting the absence of a wrap, as well as its smaller, less liquid size. Around 15 accounts bought the bond, which was priced at 78bp.

The BBC is also thought to be considering using securitisation to help refinance the £260 million development of a media centre at BBC Television's headquarters in White City, west London.

Like the Broadcasting House and Glasgow projects, that redevelopment is part of a partnership with Land Securities Trillium that was signed at the end of 2001.

BBC Pacific Quay

Status: Launched July

Originator: BBC Scotland

Description: £129 million securitisation of BBC Scotland headquarters property development loans

Arranger: Barclays Capital

Legal counsel: Sidley Austin Brown & Wood; Macfarlanes; Linklaters; Tods Murray 2034 *6% UK Gilt+78bp