Gilts a pleasure amid UK’s uncertain future in Europe

The UK’s June referendum on European Union membership may be grabbing the public’s attention, but in the background the country’s Debt Management Office has been quietly and efficiently raising the big sums of cash that have been the norm since the 2008 financial crisis. Of far more interest to Gilt market participants is the split between syndications and auctions in the DMO’s funding programme and the effect regulation is having on banks’ ability to provide liquidity — a concern that the UK market is far from alone in having to address. GlobalCapital brought together representatives from the UK DMO, Gilt-edged market makers and the investor community in the lofty surroundings of London’s Tower Bridge to discuss those issues, as well as idiosyncratic features of the UK market, such as the argument for creating Gilts linked to the Consumer Price Index (CPI), rather than the older Retail Prices Index (RPI). The DMO also shared the latest news on its review into the provision of Gilt and Treasury bill reference prices — on which banks and investors expressed their views.