MNI EXCLUSIVE: No UK Linker Benchmark Decision Yet: DMO Head

By Luke Heighton and Nick Shamim 

     BRUSSELS (MNI) - Further consultation is needed before a final decision is

taken on whether to change the benchmarking for UK index linked gilt issuance,

Robert Stheeman, Chief Executive of the UK's Debt Management Office told MNI in

exclusive comments Tuesday.

     Any decision to move away from RPI to CPI as the benchmark is complex and

more work is required to understand the costs and benefits of any changes,

Stheeman said.

     Speaking exclusively to MNI on the sidelines of AFME's European Government

Bond Conference, Stheeman said any changes will require "an orderly transition,

likely over an extended period of time. Though the case for moving away from RPI

remains 'under review'".

     --MANY MEASURES

     Stheeman stressed that the UK government would need to need to be satisfied

that demand for issuing gilts linked to CPI, "or indeed to another measure of

inflation such as CPIH, was sufficiently strong or sustainable".

     "In terms of inflation indexation more generally, it's worth noting that

the government and the private sector make wide use of measures of inflation, in

addition to being the reference rate for government bonds linked to inflation.

There is not a single measure of inflation and the quality of different measures

varies," he told MNI.

     "Given the extensive use of RPI across the public and private sectors moves

away from RPI are complex and potentially costly," Stheeman said.

     The debt chief noted while all index-linked debt is currently indexed to

RPI, the government does keep the issuance of potential new debt instruments

under review. 

     "Further moves away from RPI are complex and more work is required to

understand the costs and benefits of any changes, including through consultation

with stakeholders." 

     "Any changes will require an orderly transition, likely over an extended

period of time", Stheeman said.

--MNI London Bureau; tel: +44 203-586-2229; email: nick.shamim@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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