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A very enjoyable trip to BAFTA on Piccadilly last night to watch the six finalists in a short film competition sponsored by a specialist media insurance company. It was won by Gone Fishing, directed by Chris Jones, and I mention this only because it was a joy of a little movie, staggeringly professional-looking given that it only cost about £28,000 to make. Bill Paterson took the lead and was as reliable as ever, although it’s a bit of a shock for those of us who associate him with Traffic and The Singing Detective to see that he is now a distinctly “old” actor.
It’s been interesting to read the reactions to the news that a gilt auction by the UK Debt Management Office achieved only a 93% subscription rate. One of the lines was that “these things happen now and again”, while at the other extreme was the line that this was “a complete rejection of Brown’s spending plans and a warning that the world has lost faith in the UK’s ability to service its debt”.
To say that “these things happen” and that such a failure was “overdue” is surely disingenuous. There hadn’t been an undersubscription since 2002 (and that was an inflation-linked bond when it was clear that inflation wasn’t going to be a worry for several years) and the previous failure for a “proper” gilt was 1995. And even that one was (a) unique and (b) not as bad as the failure yesterday.
On the plus side, it was a 40-year bond, which would have as much appeal these days as inflation-linked bonds would have in 2002. These were in drastic short supply a few years ago when new accounting rules required pension funds to more closely match their asset timeframe to their liability timeframe. These days, however, that asset mismatch has largely ended.
But the long and short of this is that investors know that there’s going to be shedloads of offers from the DMO, and that this one was one of the poorer ones.
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It’s been interesting to read the reactions to the news that a gilt auction by the UK Debt Management Office achieved only a 93% subscription rate. One of the lines was that “these things happen now and again”, while at the other extreme was the line that this was “a complete rejection of Brown’s spending plans and a warning that the world has lost faith in the UK’s ability to service its debt”.
To say that “these things happen” and that such a failure was “overdue” is surely disingenuous. There hadn’t been an undersubscription since 2002 (and that was an inflation-linked bond when it was clear that inflation wasn’t going to be a worry for several years) and the previous failure for a “proper” gilt was 1995. And even that one was (a) unique and (b) not as bad as the failure yesterday.
On the plus side, it was a 40-year bond, which would have as much appeal these days as inflation-linked bonds would have in 2002. These were in drastic short supply a few years ago when new accounting rules required pension funds to more closely match their asset timeframe to their liability timeframe. These days, however, that asset mismatch has largely ended.
But the long and short of this is that investors know that there’s going to be shedloads of offers from the DMO, and that this one was one of the poorer ones.
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