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March 26, 2009

uk gilts sale tanks

Filed under: brevity,just whinging,politics — anne thrope (miss) @ 1:36 am

yesterday’s uk government bonds sale was a bit of a flop: with £1.75bn of 40-year bonds on offer, investors only bid for £1.63bn, a shortfall of £120m in take-up.

this is an alarming sign. with the uk government along with others all around the world needing to raise vast capital sums to plug projected borrowing requirements competition for funds is likely to be fierce.

and whilst admittedly these are among the longest-dated gilts on offer in the uk and therefore carry more risk than average, the temptation to extrapolate this reaction, to the market for shorter dated issues in due course if conditions do not improve cannot be ruled out.

if you’re afraid of this kind of thing, be afraid: be quite afraid. 😉

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