Wednesday, July 15, 2009

Building the UK debt mountain

Can they do it?

The UK Debt Management Office needs to sell ₤220 billion of government debt this year. Three months into the year and they have flogged ₤57 billion. It is a tall order.....

Posted by inflationwatch @ 05:34 PM (996 views)
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6 thoughts on “Building the UK debt mountain

  • So they’ve sold over a quarter of their annual quota in a quarter of a year. Not really a tall order. Could still turn out to be a struggle but well within the realms of possibility.

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  • It should be pointed three months in, over £55bn sold, the government is actually £2bn ahead of itself in meeting that target.

    Just saying n’all.

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  • What is more interesting is that the QE program has been buying far more debt than has been created, so far this year..

    ..that implies a substantial exodus of Gilt investors.

    Can they really wind down the QE program AND borrow vast amounts? It really isn’t very credible..

    ..I’m betting it will become addictive

    – Hello Zimbabwe….

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  • For the record: Last month’s proposed sale of £5bn UK government bonds (via a syndicate of banks, not at auction) brought forth over £15bn of orders from investors and realised £7bn in sales, all 25-year gilts. 94% was bought by UK investors – fund managers, insurers, pension funds and banks. No QE participants or hedge funds, which “might have looked to back-door the bonds thro’ the BoE,” were involved.

    No-one thinks this result could have been achieved at auction.

    Not sure what this means for the future. What is the appetite of the banks and institutional investors for more of the same? The £15bn of orders for this issue sounds positive. I gather about a third of UK govt bonds are held abroad and that China and others has less taste for UK bonds than for US bonds.

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  • Fallingbuzzard says:

    They’ve sold £57bn after buying back £112bn of bonds. Therein lies the problem. To sell the next £160bn will take how much QE and what level of yield? Probably £250bn at 5%. And then next year?

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  • stillthinking says:

    The value of UK gilts went down 20% over the last year for foreign buyers, and there are recent demands for UK debt to be issued in Euros.
    UK borrowing is on a short lease. I don’t see that it will last to the election, because the election is too far away. The UK cannot continue as it is. The only good thing I see is that Labour voters get their noses rubbed the hardest in the sh*t. I can still see myself spreading my unemployed wings and doing a runner for pastures anew, my distant dream. I might be dragged down with drowning UK losers, who deserve it basically, lets not mince words.

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