The UK Debt Management Office will sell £265.3bn worth of Gilts in gross terms in its coming financial year, an increase of approximately £28bn versus the revised 2023-2024 remit published after the Autumn statement in November.
The new remit, which covers the year from April 1 2024, is part of a £265.3bn net financing requirement for the year, which is up from £226.4bn in 2023.
Auctions will amount to 84.5% of that sales figure, totalling £224.3bn. The DMO will price seven syndicated transactions, unchanged from last year, through a combination of conventional and index-linked products.
Gilt sales via syndication are expected to amount to around £31bn, just £400m shy of the planned sales figure for syndications for the year ending March 31.
The remit was published as Chancellor Jeremy Hunt delivered his second UK budget speech to the House of Commons on Wednesday.
According to a senior SSA syndicate banker in London, the Gilt sales figure came in slightly above consensus expectations in terms of overall size, but would had limited impact on the market and the DMO's curve.
"In the very short term, there might be some steepening pressure on the issuer's linker curve and real yields," he said.
"The mediums took the brunt of the small increase and there was a marginal increase in linkers but the product has found fairly decent demand recently."
Financing through short and medium-term conventional Gilts, including green Gilts, is expected to increase year-on-year while long-dated sales will fall by £4bn. Sales of index-linked Gilts will rise by £300m while the proportion of unallocated amounts will increase by £9.2bn.
"People were mainly worried about whether there would be an increase in longs and there's been a small drop there. These changes will not have a significant impact."
Retail access
Gilts aside, Hunt announced the introduction of a new British Savings Bond, delivered through National Savings and Investments.
The product will offer savers a fixed rate, guaranteed for three years.
It comes as retail access to the Gilt market and to other large liquid European Government Bond markets has increasingly gained traction.
To account for the new product, the DMO has forecast a £3.4bn uptick in the net contribution to financing from NS&I, with a forecast of £10.9bn. It also expects a £1bn contribution from retail Green Savings Bonds issued by NS&I.
