Relief in City as new auction of £1.1bn government debt is oversubscribed

Image via Wikipedia

The City breathed a sigh of relief today when investors turned out in force to buy government debt, following yesterday's auction debacle.

The sale of £1.1bn of inflation-linked gilts (government bonds) maturing in 2022 was almost three times oversubscribed, indicating a healthy level of interest from investors.

The UK debt management office said it attracted £2.98bn of bids. David Buik of BGC Partners described the result as "an unqualified success".

It contrasts with yesterday's auction, when the government could not find enough buyers for its £1.75bn sale of 40-year gilts - the first failure of a gilt auction in seven years. This cast doubt on the government's ability to borrow billions of pounds to lift the economy out of recession.

Relief in City as new auction of £1.1bn government debt is oversubscribed | Business | guardian.co.uk

Related articles by Zemanta

• Government bonds tumble as bailout fuels uncertainty (telegraph.co.uk)
• Record rise in gilts as Bank of England 'starts printing presses' (telegraph.co.uk)