Three cheers for the Debt Management Office

StevieJ

Good to see the public sector have done something right It is article from the Peston at the Lefty Beeb, but credit where it is due, maybe our bacon saved, at least for now.

So here's the funny thing. If you are one of those who rails against the short-termism and excessive risk-taking of some banks and finance businesses, you might note that a public sector financial institution, the Debt Management Office, has taken a reassuringly long-term approach to managing the UK government's debts - and without its prudence, we might all be in Queer Street or Skid Row by now

http://www.bbc.co.uk/news/business-15717770

Pimperne1

StevieJ wrote: »

Good to see the public sector have done something right It is article from the Peston at the Lefty Beeb, but credit where it is due, maybe our bacon saved, at least for now.

http://www.bbc.co.uk/news/business-15717770

Yes, I read that. Barring any unforseen event Peston gave me the impression that the UK is in the clear.

vivatifosi

StevieJ wrote: »

Good to see the public sector have done something right It is article from the Peston at the Lefty Beeb, but credit where it is due, maybe our bacon saved, at least for now.

http://www.bbc.co.uk/news/business-15717770

That's two in two days. You're not turning Tory on us are you Stevie;)?

michaels

Of course borrowing long is more secure but it comes at a cost, the yield curve almost always slopes up so 10 year money costs 4x as much as 2 year money so if we are borrowing 80% of gdp interest costs are 0.4% of GDP per annum at an average maturity of 2 years cf 1.6% pa for 10 year maturities - 1.2% of GDP is an awful lot of schools and hospitals.

And the other reason it is easier to sell treasuries is that there is a fairly large buyer who has cornered the market pushing up prices and keeping yields down - that buyer? the BoE of course.

PS haven't read the article so if it is not about the UK debt roll over profile apologies for going off topic.

Generali

Interesting piece. If you take the view (as the DMO has to) that in the end all this will blow over then extending maturities is exactly the way to go.