UK DMO Shifts Gilt Issuance Toward Short Tenors as Volatility Curbs Long-Dated Demand

The UK Debt Management Office is cutting long-dated gilt issuance further, reducing planned sales of long conventional debt by about a third to £15.5 billion ($20.8 billion) from April's figure, Chief Executive Jessica Pulay said. Long gilts will make up roughly 6% of this year's issuance, down from 30% five years ago. "There is a strong demand for short-dated gilts," Pulay said in an interview, citing persistent volatility in global bond markets that "particularly affects the longer maturities." The DMO raised its overall gilt sale plan for the fiscal year by a few billion pounds on Wednesday and cancelled three long conventional auctions for the remainder of the year. The pivot has cut the weighted-average maturity to about 11 years from 17 five years ago. The DMO also outlined a Treasury bill program starting in January, plus a repo facility to support it, responding to investor demand for greater liquidity at the short end.