LONDON: U.K. government bonds were given a boost after a report showed foreign investors increased their holdings by the most on record in March.
Non-residents were net buyers of 28.2 billion pounds ($43.2 billion) of gilts that month, the Bank of England said Friday. That’s after they cut holdings by more than 13 billion pounds in the first two months of 2015 in the worst start to a year since at least 1983. The yield on 10-year gilts slid 22 basis points in March, before climbing 26 basis points last month.
The report gives an insight into the views of foreign investors before the May 7 election. Opinion polls suggest that neither the Conservatives nor Labour will achieve a majority, meaning they’ll probably need to depend on the support of smaller parties with different political agendas.
“This is mildly reassuring data for the gilts market after sharp falls” in January and February, said Nick Stamenkovic, a fixed-income strategist at Edinburgh-based broker RIA Capital Markets Ltd. “It suggests overseas investors are not too concerned about the impact of the general election next week.”