Data : Debt Management Office : Historical Gilt Holdings Data

Analysis of UK Gilt Holdings 2009 - 2015

November 2015

Data : Debt Management Office : Historical Gilt Holdings Data November 2015

For more information - Check out The Saturday Economist .comData : Debt Management Office : Historical Gilt Holdings Data

• 1 Since QE began in early 2009, UK gilts in issue have increased from £600 billion to £1.6 trillion.

• 2 Bank of England holdings have increased from zero to £400 billion accounting for 25% of all gilts in issue. BoE holdings peaked at almost 30% of total holdings in 2012.

• 3 Overseas holdings of gilts, have doubled from £200 billion to £400 billion. In the most recent period, overseas holdings have fallen to 25% of all gilts in issue, compared to an historical average of 30%.

• 4 UK institutional holdings of gilts have increased from £400 billion to £800 billion accounting for 50% of all gilts in issue.

• 5 Holdings of gilts by pension funds and insurance funds have increased from just over £200 billion to almost £500 billion.

• 6 As a share of total gilts in issue, pension fund and insurance company holdings have been steady at around 28% over the six year period.

• 7 Other UK financial institutions have seen a fluctuation in holdings with some suggestion of “front running” i.e. buying gilts ahead of the Bank of England purchase programme to benefit from rising prices. in the initial stages

• 8 In fact, all major stakeholders in gilts have increased holdings over the five year period.

• 9 This raises an interesting question about from whom has the Bank of England bought gilts as part of the QE process?

• 10 Only in the very early stages of QE is there evidence of purchased from the private sector (note 7).

• 11 In reality it would appear the Bank of England purchases gilts from the Debt Management Office and not from financial institutions. Asset values are guaranteed by Treasury.

• Dividends, yields and coupons are also returned to Treasury, which effectively enables the government to finance borrowing with a Dire Straits underpin “Money for nothing - Gilts for Free.”

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2009 2010 2011 2012 2013 2014 2015

UK Total Gilt Stocks

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Data : Debt Management Office : Historical Gilt Holdings Data £ Million

0

100,000

200,000

300,000

400,000

500,000

2009 2010 2011 2012 2013 2014 2015

Bank of England Holdings UK Gilts

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Data : Debt Management Office : Historical Gilt Holdings Data £ Million

0%

5%

10%

15%

20%

25%

30%

2009 2010 2011 2012 2013 2014 2015

Bank of England Holdings of UK Gilts %

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Data : Debt Management Office : Historical Gilt Holdings Data

0

100,000

200,000

300,000

400,000

500,000

2009 2010 2011 2012 2013 2014 2015

Overseas Holdings UK Gilts

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Data : Debt Management Office : Historical Gilt Holdings Data £ Million

20%

25%

30%

35%

2009 2010 2011 2012 2013 2014 2015

Overseas Holdings of UK Gilts %

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Data : Debt Management Office : Historical Gilt Holdings Data

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2009 2010 2011 2012 2013 2014 2015

UK Financial Institutions Holdings UK Gilts

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Data : Debt Management Office : Historical Gilt Holdings Data £ Million

30%

40%

50%

60%

2009 2010 2011 2012 2013 2014 2015

UK Financial Institutions Holdings of UK Gilts %

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Data : Debt Management Office : Historical Gilt Holdings Data

0

100,000

200,000

300,000

400,000

500,000

2009 2010 2011 2012 2013 2014 2015

Pension Funds Holdings UK Gilts

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Data : Debt Management Office : Historical Gilt Holdings Data £ Million

0%

10%

20%

30%

40%

2009 2010 2011 2012 2013 2014 2015

Pension Funds Holdings of UK Gilts %

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Data : Debt Management Office : Historical Gilt Holdings Data

0

36,000

72,000

108,000

144,000

180,000

2009 2010 2011 2012 2013 2014 2015

Other UK Financial Institutions Holdings UK Gilts

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Data : Debt Management Office : Historical Gilt Holdings Data £ Million

0%

5%

10%

15%

20%

25%

2009 2010 2011 2012 2013 2014 2015

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Data : Debt Management Office : Historical Gilt Holdings Data

Other UK Financial Institutions Holdings UK Gilts %

10 year Gilt Yields Qtr Basis %

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Data : Bank of England

0.0

1.0

2.0

3.0

4.0

5.0

2009 2010 2011 2012 2013 2014 2015

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Data : Debt Management Office : Historical Gilt Holdings Data

Data Set £ millions

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Data : Debt Management Office : Historical Gilt Holdings Data

Data Set £ millions

Data : Debt Management Office : Historical Gilt Holdings Data

The Analysis of UK Gilt Holdings 2009 - 2015

November 2015

QE in the UK