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UK cuts gilt issuance plans back to pre-pandemic norms

UK cuts gilt issuance plans back to pre-pandemic norms
UK cuts gilt issuance plans back to pre-pandemic norms   -   Copyright  Thomson Reuters 2022
By Reuters

By Andy Bruce

LONDON – Britain’s government said on Wednesday it would slash its bond sales in the coming financial year, taking them back towards pre-pandemic levels.

The Debt Management Office said it planned to issue 124.7 billion pounds of gilts in the 2022/23 financial year which starts next month, down from almost 195 billion pounds in the soon-to-end financial year.

The DMO said its new total included 10 billion pounds of green bonds.

Gilt issuance in the five years leading up to the COVID-19 pandemic averaged about 125 billion pounds a year, before desperate measures to prevent the collapse of Britain’s economy pushed bond sales to a record 485.8 billion pounds in 2020/21.

A Reuters poll of primary dealers – the banks hired by the government to create a liquid market for its debt – had pointed to a 2022/23 remit of around 147 billion pounds.

Investors responded to the announcement by buying British government bonds and the 10-year gilt yield, which moves in the opposite direction to prices, extended a fall on the day and was down by around 7 basis points at 1.633%. [GB/]

The DMO said it planned 23.2 billion pounds of net Treasury bill sales, a little more than the 20 billion pounds pencilled in by dealers in the poll.

The new remit showed five planned gilt sales via syndication.

(This story corrects to remove incorrect reference to record low index-linked issuance from headline and story)