Demand for Gilt sales plummets

Demand for Gilt sales at auctions has fallen to the lowest level since the financial crisis, according to Financial Times analysis.

In June, £3.2bn of 10-year UK debt received bids of 1.19 times the amount sold, which marked the lowest level for six years. This was put down to the high level of UK bond issurance and market volatility.

Analysis by the FT showed that the bid-to-cover ratio has dropped this year.

“The volume of debt issued by the UK is far higher than it was pre-crisis, when you’d see £10bn or so a year, so you end up with more supply than the market is used to,” said John Wraith, head of UK rates strategy at UBS.

“Demand for gilts remains strong,” said the Treasury. “But as one would expect, we remain alive to risks associated with wider market volatility.”

The drop in demand may affect the way the UK issues debt, says Robert Stheeman, chief executive of the UK Debt Management Office. “Conversations are happening, although these things don’t change overnight.”