In its latest quarterly reserach update, the Bank of England acknowledges the recent spike the cost of credit protection on UK gilts, and what it means about the world’s confidence in the country. (via DailyMail)
In addition, contacts noted that gilt yields were affected by
concerns about how the gilt market would absorb the scale of
prospective issuance by the UK Debt Management Office
and/or potential gilt sales by the Bank. Similarly, because of
the projected UK government debt position, investors
mightalso have become more concerned about the
UnitedKingdom’s credit standing and demanded additional
compensation to hold gilts. The premia on long-horizon UK
sovereign credit default swaps (CDS) rose both in absolute
terms and relative to other triple-A rated sovereign borrowers,
but remained below their peaks earlier in the year (Chart 13).
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