UK - The government failed to respond to calls from the UK pensions industry to address a shortage of long-dated gilts when it announced in its pre-Budget report that borrowing was set to soar.
The National Association of Pension Funds, which had earlier urged the Chancellor to skew any additional issuance to long-dated gilts, described it as 'a missed opportunity'.
Chris Hitchen, NAPF chairman, said: "In the current economic environment, the government must take all steps necessary to help pension scheme sponsors and pension savers. This includes ensuring the right assets are available to back schemes."
Matt Tickle, associate at Barnett Waddingham, said, while it was understandable from the government's perspective why it had focused on short and medium-dated gilts, pension funds were crying out for longer-dated bonds, particularly longer-dated index-linked bonds.
He said: "A huge chunk of their liabilities are linked to inflation so they need to protect against that. In one respect it's quite disappointing from the pension schemes' point of view that they are not seeing more of this issuance at the long end.
"I guess it's the government trying to juggle all of its balls in the air at once and, arguably, focussing on pension schemes is not at the top of their list at the moment."
But Mark Parry, head of fixed income at Close Investments, said in terms of global investors, demand was more for shorter dated gilts.
He said: "In this world where people are more concerned than they have been about the return of their capital, rather than the return on their capital, you can see where shorter dated bonds have a role to play from an asset allocation perspective. From a safety first perspective they make a whole lot of sense, especially as base rates are going to fall further in this country and stay down."
And Simon Ward, chief economist at New Star, said instead of issuing more gilts, the government should finance the borrowing through the sale of Treasury bills.
He said: "One of the major concerns at the moment is the weakness of money supply growth and if you were to fund the deficit by issuing Treasury bills they would tend to be bought by banks and that would help to boost money supply growth.
"If you fund it by selling gilts to an insurance company or pension fund, that then sucks the money back out so there is no positive impact on the money supply."
But Ward said with long term interest rates low, it was a good time for the government to secure cheap funding. He said: "I personally would be in favour of a sort of barbell strategy where they sell a lot more Treasury bills than they are at the moment, but they also sell a lot more long-dated gilts and less of the short and medium."
Details of the government's increased gilt sales are available on the UK Debt Management Office website.
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