Foreign investors have cut their gilt holdings, according to Bank of England data covering the first full month following the UK’s vote to leave the European Union.
Foreign-owned gilt holdings fell £4.4bn in July, their first drop since February and their steepest fall since January.
The data pre-dates the Bank of England’s stimulus measures in August, which included a rate cut to 0.25 per cent and a £60bn expansion of quantitative easing.
Its buyback of government bonds got off to a bumpy start when it offered to buy back £1.17bn of long-dated gilts but received offers of only £1.11bn, leaving it with a shortfall of £52m.
The lower than expected appetite for gilts buyback caused yields on long-dated Government bonds to fall to record lows, with several turning negative.
The yield on the 4.75 per cent March 2020 gilt dropped to -0.012 per cent, along with the 3.75 per cent September 2019 gilt. The 4.5 per cent March 2019 gilt dropped to -0.010 per cent.