Finance
New UK Debt Chief Sees Ready Appetite for More Bond Issuance
Published by Jessica Weisman-Pitts
Posted on October 31, 2024
3 min readLast updated: January 29, 2026
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Published by Jessica Weisman-Pitts
Posted on October 31, 2024
3 min readLast updated: January 29, 2026
Add as preferred source on GoogleBy David Milliken
LONDON (Reuters) -Britain’s government bond market is well placed to absorb the higher debt issuance needed to fund the new Labour government’s budget plans, the head of the country’s debt agency told Reuters on Wednesday.
The UK Debt Management Office revised up its gilt issuance plans for this financial year by 19.2 billion pounds ($24.9 billion) to 296.9 billion pounds, a shade more than the 294 billion pounds expected in a Reuters poll of gilt dealers.
“The gilt market has a very strong track record, including this year, in adjusting to changes in gilt supply. And we expect that this remit revision will be absorbed smoothly by the market,” DMO CEO Jessica Pulay said.
Issuance this year is on track to be the second highest on record, behind only that in 2020/21 during the COVID-19 pandemic.
Pulay took the top job at the DMO in July, succeeding Robert Stheeman who spent 21 years at the agency’s helm.
Wednesday’s budget – the first by finance minister Rachel Reeves – set out plans for annual government spending to rise by 70 billion pounds a year in five years’ time, only 36 billion pounds of which will be covered by higher taxes.
Over the next four years, budget forecasters estimate the DMO will need to raise 1.063 trillion pounds of debt – 120 billion pounds more than foreseen at the time of March’s budget.
After initially rallying during Reeves’ budget speech, gilt prices subsequently fell as the scale of borrowing became clear.
Despite the later price moves, Pulay said that overall she thought the gilt market had reacted “quite positively” to the DMO’s revised issuance plans.
For this financial year, the biggest increase will come in long-dated gilts with a maturity of more than 15 years, with issuance rising to 59.2 billion pounds from 50 billion pounds when issuance plans were last updated in April.
“The reason why we have announced a slight increase in longs… reflects the strong performance of the long-dated programme so far this year,” she said.
Investors had been keener to buy more of these gilts at syndications and after regular DMO auctions than had been the case for shorter maturities, she said.
Asked if increased gilt issuance was likely to push borrowing costs higher, Pulay said it was hard to speculate.
“But I do think that we need to take into account the strong performance that we’ve seen at our auctions and indeed our syndications to date, as an indicator of the robust level of demand that exists for gilts currently,” she said.
($1 = 0.7702 pounds)
(Reporting by David Milliken; Editing by Jan Harvey)
Borrowing cost refers to the interest expense incurred by a borrower when obtaining funds. It can be influenced by market conditions and the borrower's creditworthiness.
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