FT Alphaville " The Osborne bond, the official request From the UK Debt Management Office's issuance plans for the 2012-13 fiscal year, released as part of the UK Budget documents... In light of evidence of strong demand for gilts of long maturities and against the backdrop of historically low long-term interest rates, in 2012-13 the DMO will consult on the case for issuance of gilts with maturities significantly longer than those currently in issue, that is in excess of 50 years, and/or perpetual gilts. The consultation will build an evidence base to inform the Government's decision on whether to issue such instruments. It will seek to establish the likely strength and sustainability of demand, the cost-effectiveness and risks of issuance, and the impact on market liquidity and the good functioning of the wider gilt market. No presumption has been made about issuance at this stage, and any subsequent decision about whether to proceed with issuance will be informed by the responses received to the consultation and assessed with reference to the debt management objective. If any such decision were made to proceed with issuance in-year, this would be reflected at the time of the next planned remit revision. The DMO's "long conventional gilt" "in-year" issuance target is £37.6bn, out of a net financing requirement of £166.4bn (currently - the remit might be revised in say, autumn). Chart (via the DMO) here. The question being of course, not only how long but how large a super-maturity gilt should be. The larger, arguably the more liquid, and we know that longer-dated gilts tend to be less liquid. So if you go very long, should you go very large? Is it really too much for the technology of debt management to reopen an initial century bond to new auctions over time, increasing its size? We're trying to canvass views but here's a case for it from Julian Wiseman back in 2005. Back when the DMO was consulting on a 50-year bond for the first time. Which maturity is now pretty normal. Related link: No forever debt please, we're British - FT Alphaville This entry was posted by Joseph Cotterill on Wednesday, March 21st, 2012 at 14:52 and is filed under Capital markets. Tagged with bonds, gilts, government bonds, Sovereign debt, UK.