Debts & Loans

Britain should have no problems raising billions of pounds of debt in international markets this year, in spite of record issuance and a plunge in sterling, the Debt Management Office chief was quoted on Thursday as saying.

However, Robert Stheeman, responsible for managing Britain's debt, told the Financial Times the possibility of a government bond auction failing to raise the amount of money targeted had increased.

The pound fell to 23-year lows against the dollar on Wednesday as a government bank rescue plan unveiled this week fuelled market concerns about Britain's rising debt burden.



The government is looking to sell a record 146 billion pounds of gilts this financial year to finance borrowing as it grapples with a banking crisis and a steep economic downturn.

Soaring government borrowing and a tumbling currency have been a dangerous mixture for Britain in the past, driving up the interest payments needed to attract investors.

But Stheeman said he did not believe sterling's weakness was a problem. "It could make gilts more attractive to some overseas investors," he was quoted as saying.

He played down fears that Britain would lose its prized triple A credit status, the newspaper said.

He said the chance of a bond auction failing had risen "because we are having more than ever before."



"But a single uncovered auction is not my greatest concern ... The most important point is that I do believe the amount of debt we are raising is sustainable ... The market has shown the ability to absorb the much bigger amount of issuance," he said.