U.K. Lifts Bond Sales to Record to Fund Virus Recovery

The U.K. will sell a record amount of government debt this year as the country battles the economic fallout from the coronavirus, testing the level of market demand for its bonds.

The Debt Management Office announced plans to sell another 50 billion pounds of gilts ($61.9 billion), bringing its issuance this fiscal year through August to 275 billion pounds. A survey of primary dealers forecast 412 billion pounds of issuance for the year.

The issuance plans look set to dwarf those during the height of the financial crisis. While the Bank of England is helping to keep bond yields in check through its asset-purchase program, the latest figures will likely add to concern over borrowing levels.

The pound rose 0.4% to $1.2381. U.K. bonds, which rallied earlier this month to touch record-low yields in shorter maturities, will open trading at 8 a.m. in London.

The U.K.‘s debt load climbed above the nation’s yearly economic output in May for the first time since 1963. Chancellor Rishi Sunak, who has committed helping to pay furloughed worker salaries until October, told Bloomberg Television Friday that the current rate of spending was not sustainable.

The DMO had previously only given issuance plans for the four months through July, which stood at 225 billion pounds, just three billion pounds short of the previous record in 2009-10.

(Corrects to show that yields fell to a record this month in the fourth paragraph.)