The UK Debt Management Office is canvassing market opinion on the merits of conducting gilt sales via supplementary measures such as mini-tenders, syndication and even direct placement of gilts with end investors. The size of the UK Treasury’s borrowing requirement led the DMO to consult its Gilt Edged Market Makers in a process that ended on January 28. The DMO is seeking to raise the supply of long-dated and index-linked gilts, in particular. In light of the high financing requirement of £143 billion ($194 billion), £147 billion and £135 billion for the next three years from 2009/10, the government’s medium-term strategy is to skew issuance to long-dated maturities. This strategy seeks to take advantage of strong actuarially driven demand at the long end from pension and insurance funds. The last UK syndicated gilt issuance took place in September 2005 when the DMO sold a £1.25 billion 50-year linker. That was a response to the poor auction outcome of a conventional 50-year gilt in May of that year. The results of the consultation will be announced at the time of the UK budget in March.
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