UK gilts boom driven by surge in overseas buyers

Foreign demand for gilts could be replacing pension fund purchasers as the key demand driver for the...

Foreign demand for gilts could be replacing pension fund purchasers as the key demand driver for the UK gilt market. That said, demand for government paper from insurance firms and pension funds is still strong, according to Simon Ward, economist at New Star. He says: "The conventional explanation is that gilts are still being boosted by institutional buying, as insurance companies and pension funds rebalance their portfolios from equities to bonds," he says. Yet Ward believes that as institutions have bought little more than £1bn of gilts in the first half of 2005, down from nearly £17b...