–Better Cover Results Should Reassure BOE On Market Appetite For QE
LONDON (MNI) – The Bank of England managed to achieve cover ratio
of 1.81 times on its reverse auction for over 25-year gilts Tuesday.
The cover ratio was relatively high for recent auctions. Last
Tuesday’s cover on the same auction was only 1.31.
There have been concerns that the current pace of quantitative
easing is causing indigestion in the gilt market, so today’s
cover ought may provide the BOE with some reasurrance that there is
enough appetite for the present stg75 billion programme.
Analysts generally expect the BOE To extend the programme further
when the current one expires in February although not to expand the pace
of purchases. Minutes for the BOE Monetary Policy Committee’s November
meeting due out Wednesday will give some idea of their readiness to
extend the asset purchases.
The BOE bought gilts at all nine maturities in Tuesday’s aucion,
which included:
— Stg149.6mln 4.25% 2039 Gilt at average price 121.721
— Stg294.8mln 4.25% 2040 Gilt at average price 121.899
— Stg62.4mln 4.50% 2042 Gilt at average price 127.845
— Stg110.1mln 4.25% 2046 Gilt at average price 124.556
— Stg330.7mln 4.25% 2049 Gilt at average price 125.722
— Stg41.6mln 3.75% 2052 Gilt at average price 114.866
— Stg305.3mln 4.25% 2055 Gilt at average price 127.931
— Stg318.9mln 4.00% 2060 Gilt at average price 123.091
On Wednesday the BOE will hold a QE auction for 10- to 25-year
gilts.
–London Bureau; Tel: +442078627492; email: dthomas@marketnews.com
[TOPICS: MABDS$,M$$BE$]
