UK At 80% Risk Of Rating Downgrade On Current Debt Plan:PIMCO

purch

“…there remains the risk that the combination of the large amount of gilt auctions planned in 2010-11 and the cessation of Quantitative Easing will result in an excessive supply of UK gilts onto the market at a time when other governments will be offering similar products, with the possible result that auctions are uncovered and yields increase.”

Yes.

If the DMO couldn't get a cover of 2+ on an auction of 5 year paper under current circumstances even Mr Brown (our's not the lame duck) would be worried :cool:

purch

Now who is the muppet?

Kermit ??????? :eek:

Mr.Brown_4

purch wrote: »

Yes.

If the DMO couldn't get a cover of 2+ on an auction of 5 year paper under current circumstances even Mr Brown (our's not the lame duck) would be worried :cool:

Worried? I'd be beside myself. Would be the first time in forty five years workign in the City that I'd seen such a thing. Although I do remember the waffles crisis of '73, had to send the secretary out in the cold for more.

chucky

mbga9pgf wrote: »

The Bank doesnt directly buy gilts. The deal is as follows. BOE Purchase Assets from the banks (RBS,Barclays capital etc) in return for cash. Those assets are held on the BOE balance sheet. The Independent banks thus go out and purchase Gilts from the market. The banks are also injecting quite a lot of cash into the FTSE at the moment it would seem.

it looks like you are because you haven't answered the question and answered something completely different - good going :T

you bears really need to get your stories straight

Thrugelmir wrote: »

Nothing to see here in reality. 5 year short dated issue that the BOE will no doubt buy back using QE.

Depending on how quotes get edited to fit web pages, can be misleading.
The healthy demand for the paper was expected, "given the pressure on U.K. banks to buy the so-called high grade quality assets that gilts are meant to be on their bank capital books, with the patent cheapness of the stock relative to its peers, and the very steep profile of the front of the U.K. gilt curve offering obvious attractions," said Marc Ostwald, Monument Securities strategist.
Furthermore, Wednesday's Bank of England buyback made the auction even more attractive, he added.

mbga9pgf wrote: »

It would not surprise me if this has been requested by the BOE after recent rumblings of a write down. If UK creditor confidence collapses, its going to be bad for the UK banks on asset insurance schemes. I would to see the input from non-uk banks into the gilts market.... shame those figures aint public isnt it chucky?

not another bear conspiracy theory :rolleyes:

ManAtHome

As I understand it - the DMO offer an issue, peeps put in bids, DMO sells to highest bidders, highest bidders sell to BoE for a couple of percent more than they paid. Presumably they could have sold 2.68 times as many as they had in this issue, but don't think that all (or any) of the bids have to be more than the nominal value (£100).

The level of coverage means plenty of people think that Gilts are currently a good deal to buy and hold, or a good deal to buy and flog on the BoE... Suppose we'll find out which when (or if) the QE cash runs out.

mbga9pgf

Chucky, I did answer. The lots of individuals were banks getting laced with QE asset for cash conversions. Barclays, RBS, HBOS all can put bids in with QE cash, making it look as if lots of interest.

As I said, if they were more transparent about WHO was buying gilts off the DMO I would not have a reason to question the process. Especially at a time they need transparency to help sales.

chucky

mbga9pgf wrote: »

Chucky, I did answer. The lots of individuals were banks getting laced with QE asset for cash conversions. Barclays, RBS, HBOS all can put bids in with QE cash, making it look as if lots of interest.

As I said, if they were more transparent about WHO was buying gilts off the DMO I would not have a reason to question the process. Especially at a time they need transparency to help sales.

you're missing the point and even more so did [STRIKE]mewbie[/STRIKE] Mr brown who was lost as soon as someone mentioned yield curve

the issues have all been over-subscribed (i'm sure that you'll correct me if i'm wrong).

it doesn't matter what banks put bids in - it matters at what amounts they have put the bids in.

chucky

ManAtHome wrote: »

The level of coverage means plenty of people think that Gilts are currently a good deal to buy and hold, or a good deal to buy and flog on the BoE... Suppose we'll find out which when (or if) the QE cash runs out.

surely the bid amounts will come to more than the total issue amount?

mbga9pgf

chucky wrote: »

you're missing the point and even more so did [STRIKE]mewbie[/STRIKE] Mr brown who was lost as soon as someone mentioned yield curve

the issues have all been over-subscribed (i'm sure that you'll correct me if i'm wrong).

it doesn't matter what banks put bids in - it matters at what amounts they have put bids in.

And you are missing my point - without the promise of QE, what incentive have the UK banks to buy into a low yeilding, high risk asset? Why are they going to risk their own cash?

Mr_Mumble

Note the cover ratio for BoE purchases (of 3-10 yr Gilts) just hours after the DMO sale (of a 5 year gilt) was higher:

14:51 Asset Purchase Facility gilt purchase operation results
Competitive offers
Total offers received Stg 6,669.62mn
Total offers accepted Stg 1,699.94mn
The cover ratio in the competitive auction was therefore 3.92

http://www.bankofengland.co.uk/markets/apf/apfgiltresults100106.pdf