The UK Debt Management Office (DMO) is adjusting its strategy for long-dated government bonds, known as gilts, due to falling demand from domestic pension funds. CEO Jessica Pulay stated in March that the current issuance plans reflect this structural decline in demand.
For the 2026-27 fiscal year, the DMO has reduced planned sales of long conventional gilts to £23 billion, which represents approximately 9% of total issuance. The DMO is also considering absorbing long-dated gilts from the Bank of England's balance sheet.
The shift follows a recalibration in the liability-driven investment sector after the 2022 mini-budget crisis. Pension funds are currently de-risking by moving toward shorter maturities or transitioning to buyouts with insurance companies.
The Bank of England's APF schedule for Q3 2026 includes three short-maturity gilt auctions of £725 million each and two medium-maturity auctions of £600 million each, with no long-dated sales planned for the quarter.
On September 24, 2026, the DMO will conduct a pilot switch auction. This mechanism allows the government to replace long-dated bonds with shorter maturities to reshape the debt duration profile without increasing the total debt stock.
The average maturity of UK gilts is approximately 14.4 years, among the longest in the G7. While the pivot to shorter maturities in new issuance is lowering this average, a significant stock of long gilts remains.
