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BOE Bond Sales Are Blow for Market Already Facing Record Supply

  • RBC sees record sales of long-dated UK debt this fiscal year
  • BOE to sell gilt holdings just as fiscal spending risks rising

Gilts sales by the Bank of England will add to the largest pile of long-dated bonds investors have had to absorb in over a decade, pressuring a market already on edge over the prospect of looser fiscal policy.

The BOE is set to sell around 10 billion pounds ($12.1 billion) of government bonds per quarter as it ramps up efforts to shrink its balance sheet. That will take net supply of long-maturity bonds to an estimated 46.9 billion pounds this fiscal year, the most in data going back to 2009, according to RBC Capital Markets.