Foreign Investors Bought U.K. Bonds in March, BOE Says


U.K. government bonds were given a boost after a report showed foreign investors increased their holdings by the most on record in March. The data were subsequently corrected to show the increase was only the most since November 2013.

Non-residents were net buyers of 28.2 billion pounds ($43.2 billion) of gilts that month, the Bank of England said Friday. The central bank amended that figure to 14.8 billion pounds. It also corrected data for February to show overseas investors raised holdings by 5.8 billion pounds, from a previous report showing a 7.6 billion-pound cut.

The yield on 10-year gilts slid 22 basis points in March, before climbing 26 basis points last month.

The report gives an insight into the views of foreign investors before the May 7 election. Opinion polls suggest that neither the Conservatives nor Labour will achieve a majority, meaning they’ll probably need to depend on the support of smaller parties with different political agendas.

Hitting Demand

The yield on U.K. 5 percent securities due in March 2025 fell on Friday by two basis points, or 0.02 percentage point, to 1.81 percent as of 11:40 a.m. London time, leaving it 17 basis points higher in the week. The price rose 0.19, or 1.90 pounds per 1,000-pound face amount, to 128.605.

The pound extended a weekly decline against the euro after a report Friday showed an index of U.K. manufacturing unexpectedly cooled last month, with the relatively strong currency hitting overseas demand for British goods.

A Purchasing Managers’ Index fell to a seven-month low of 51.9 from 54 in March, Markit Economics Ltd. said. Analysts had forecast a reading of 54.6. New export orders shrank for the fifth time in seven months.

Sterling depreciated 0.8 percent to 73.69 pence per euro, down 2.9 percent this week. It fell 0.4 percent to $1.5288, trimming its weekly gain to 0.7 percent.

Clarification: This story has been amended to reflect the BOE’s correction of bond purchasing data.

(Bank of England corrects data on gilt purchases used in headline and first two paragraphs of story published May 1. Corrected story shows overseas investors were net buyers in February, removes quotes that were in fourth and final paragraphs of original article and removes size and scope on sales in first two months of the year.)
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