The Debt Management Office's gilt issuance plans for the 2020/21 did not take into account the full extent of likely increases in borrowing to prop up the economy during the coronavirus outbreak, which suggests more than 156.1 billion pounds of gilts will need to be issued in 2021/21.

A Reuters poll of primary dealers - banks appointed by the government to help create a liquid market for gilts - had pointed to a Debt Management Office remit of 166.6 billion pounds for the 2020/21 financial year.

Short-dated gilts accounted for 32.7% of the DMO's new remit, significantly more than most of the dealers polled had expected. "Why are the DMO doing that, rather than issuing for 10 years at less than half of one percent, or through 30 years at less than three quarters of one percent?" asked Ben Lord, manager of the M&G Gilt and Fixed Interest Income Fund.

Gilt yields touched record lows earlier this week, briefly sending some benchmark yields into negative territory on Monday for the first time. Index-linked gilts accounted for just 8.1% of the DMO's 2020/21 remit, the smallest proportion since 2004/05.

Copyright Reuters, 2020