Euromoney’s inaugural Sterling Conference was a great success. The conference brought together issuers, investors and intermediaries to discuss the opportunities in the sterling bond market at an ideal time to take stock of the crucial issues surrounding public finances and policy - shortly after the coalition’s first 100 days in office and immediately before the October Public Sector Borrowing Review.

Sterling has become a safe haven currency. Investors are buying UK government bonds in record amounts. But deep worries remain about the path of the economic recovery, inflation and the state of the government finances. Robert Chote, Director of the Institute for Fiscal Studies and one of the UK’s most respected economic analysts, opened the conference sharing his outlook for public finances and his analysis of the credibility of the coalition government’s deficit reduction plans. This presentation gave the economic and political background for the subsequent panels of issuers and investors who addressed: sterling bonds as an asset class, the Gilts market, inflation and LDI, the UK and non-UK issuer base and sterling investor strategies. Robert Stheeman, Chief Executive of the UK Debt Management Office, presented an update on the Gilts issuance programme, following hot on the heels of the successful Gilt auction earlier that morning.

Click here to view Robert Stheeman’s presentation (IMPORTANT: please note that this presentation is subject to Crown Copyright and should not be reproduced without the express permission of the UK Debt Management Office.)

Overall, participants were relatively positive about the short term outlook for the sterling market, but concerned about the state of the public finances and ability of the coalition government to implement the promised cuts in spending over the medium term. We will reconvene in 2011 to re-assess the situation in the public finances, see whether participants’ expectation of more QE as opposed to a QE unwind proved correct and find out whether the influx of foreign investors have stayed in the sterling bond market.

Euromoney would like to thank all our speakers, sponsors and delegates for braving the London tube strike to make the first Sterling Conference such a successful one. We look forward to building on this foundation next year.

Results from our live audience polls:

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