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MNI (London)
--DMO, BOE To Liaise Closely On QE Unwind: Stheeman
--Little Sign Of Brexit Impact On UK Gilt Markets
--Foreign Buyers Still Good Presence In UK Gilt Market
--No Plans For DMO Euro Issuance Ahead
By Luke Heighton and Nick Shamim
     BRUSSELS (MNI) - The UK's debt managers will liaise closely with the Bank
of England when the time finally comes for the winding down of the central
bank's balance sheet in order to ensure smooth market operations, the head of
the Debt Management Office told MNI in exclusive comments Tuesday.
     Gilt market disruption was "in no one's interest" and the DMO and the BOE
would liaise on operational aspects to ensure a smooth future unwinding of gilt
holdings built up through quantitative easing, Robert Stheeman, Chief Executive
of the DMO said.
     The DMO's interest lay in "ensuring that prices adjust smoothly in order to
allow the market to absorb stock on offer at any given issuance event," Stheeman
said, speaking to MNI on the sidelines of AFME's European Government Bond
     "If and when the Bank of England does make any changes to its monetary
policy stance - be that interest rate changes or asset sales - we will continue
to focus on encouraging a liquid and efficient gilt market thats able to
accommodate any such developments smoothly," Stheeman added.
     With Brexit again the lead story in Westminster, Stheeman emphasised how
the Gilt market has responded to all developments in the process in an orderly
     "I would say that the main barometer of the market's perception of
developments in the negotiations has been seen in the sterling currency market
rather than the gilt market," Stheeman added.
     Whilst the UK debt chief refused to speculate on the outcome of the Brexit
negotiations, he noted that the gilt market is deep and liquid and has a proven
track record of successfully adjusting to a number of external shocks.
     "Key is an efficient price discovery process and the depth and liquidity of
the gilt market has facilitated this," Stheeman added.
     Stheeman rejected suggestions that ongoing uncertainty over the UK's status
post-Brexit might have led to a notable drop-off in foreign sales.
     "We have not noticed any particular reduction in overseas interest in our
program," Stheeman added.
     Although some overseas investors "may take short-term tactical decisions
regarding investing in gilts" in the event of a cliff-edge scenario, he added,
"we would expect the overall strategy - particularly of overseas institutional
investors - to continue to focus on holding high quality/liquid assets which
will continue to be supportive of gilts.
     "It's worth noting that overseas accounts took 20% of the most recent
syndication of the conventional 2071s in October, some twice the average at
syndications in 2017-18," said Stheeman. The UK debt chief also noted that the
latest bankstats data showed net inflows from overseas investors into gilts of
GBP5.4 billion in September.
     Stheeman also said the DMO had no plans to issue bonds in euros ahead,
saying the "policy of the UK government is to finance its deficits in sterling."
--MNI London Bureau; tel: +44 203-586-2225; email:
--MNI Frankfurt Bureau; +49-69-720-146; email:
--MNI London Bureau; tel: +44 203-586-2229; email:
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