Britain is trying to limit the burden on bond dealers as it prepares to sell the highest volume of government debt since the COVID-19 pandemic against a backdrop of turbulent markets, the head of the UK Debt Management Office (DMO) said on Wednesday.
"Global financial markets are pretty stressed and volatile. Some of the movements that have occurred over the last week in fixed income markets have been huge," DMO chief executive Robert Stheeman told Reuters.
"Behind the scenes, we're very focused on the duration risk and spreading that out, and make sure that supply doesn't unnecessarily weigh on the balance sheet capacity and the intermediation capacity of our primary dealers," Stheeman said.In practice, that can mean a skew towards short-dated bonds with a maturity of under seven years, although British government debt continues to have the longest maturity of any major economy.
Over the coming year, the DMO aims to sell 86.7 billion pounds of short-dated bonds, 65.3 billion pounds of medium-dated, 50.1 billion pounds of long-dated gilts and 26.2 billion pounds of inflation-linked debt.
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