UK Debt Office Cuts Long Gilt Sales Amid Shift in Government Bond Strategy

The UK Debt Management Office (DMO) is shifting its strategy in managing the country's government bonds. The DMO has cut long gilt sales to just 9% of total issuance for the 2026-27 fiscal year, down from previous plans.

This decision reflects declining structural demand for long-dated gilts from domestic pension funds. Jessica Pulay, CEO of the DMO, stated in March that issuance plans take into account this decrease in demand.

The Bank of England is also adjusting its strategy by focusing on shorter maturities in new gilt auctions. The central bank's Asset Purchase Facility (APF) schedule includes short-maturity gilt auctions and zero long-dated sales planned for Q3 2026.

The DMO plans to test a switch auction, which allows the government to retire long-dated bonds and replace them with shorter maturities, on September 24, 2026. This move aims to reshape the duration profile of outstanding UK debt without increasing the total stock.