LONDON (MNI) – The UK Gilt market is extremely robust, enough to
handle another record Stg8.0 billion syndicated Gilt sale but the Debt
Management Office (DMO) prefers to spread out its Gilt market
operations, said Robert Stheeman, the chief executive at the DMO.

Speaking at the Euromoney Global Borrowers and Investors Forum
here, Stheeman said that the DMO has now completed around a quarter of
its Stg167.5 billion gilt issuance plans for FY2011/12.

Stheeman added the supplementary issuance programme, which includes
syndicated sales is very useful to the pension fund industry.

“We try and match our supply a little bit more closely to the
demand in the market, in particular for long-dated and also very
long-dated Gilts, along with inflation linked Gilts, where we describe
demand there at times as being ‘lumpy'”.

Stheeman added a quarter part of the investment demand need is from
the pension fund industry in the UK that needs to be able to sometimes
transact in larger size, just through the auction process.

We also attempt to supplement the auction programme, i.e.
syndications, that is uniquely useful to the pension fund industry.

“If you look at the statistics that we publish of the syndication
sales, you see quite often more than 90% goes to pension funds,” he
said.

The debt chief also talked about the importance and the growing
size of Gilt Edged Market Makers (GEMMS) and said they were there to
provide liquidity and the DMO expects GEMMS to participate at the
auctions.

Stheeman downplayed the notion of failed auctions, instead
preferring to calling them uncovered auctions, and said the DMO isn’t as
concerned as that emphasis placed by the media on this.

However, Stheeman added that if there is a series of uncovered
auctions, then this may be a problem.

The UK debt chief also said that the UK Gilts market is benefiting
from the current turmoil in the eurozone add the DMO is aware of what is
going on there.

–London Bureau; tel: +442078627492; email:

nshamim@marketnews.com/wwilkes@marketnews.com/pburnside@marketnews.com

[TOPICS: M$B$$$,M$$FI$,MFBBO$,M$$BE$]