300 billion pounds of new UK bonds on the way: primary dealers300 billion pounds of new UK bonds on the way: primary dealers
British Pound Sterling banknotes are seen in a counter machine at the Money Service Austria company’s headquarters in Vienna

LONDON (Reuters) – A record-breaking 300 billion-pound deluge of government bonds is on the way from Britain’s debt agency as finance minister Rishi Sunak seeks to fund a surge in public spending in the face of the coronavirus crisis.

The Reuters survey of 11 primary dealers forecast gilt issuance of around 300 billion pounds ($370 billion) when the Debt Management Office (DMO) announces its revised remit for the 2020/21 financial year at around 0630 GMT on Thursday.

Primary dealers are banks hired by the government to help create a liquid market for its debt.

Last month, before the coronavirus crisis escalated, the DMO said it planned to issue 156.1 billion pounds of gilts.

But the unprecedented measures announced since then to avert the collapse of Britain’s economy means that it will have to publish a much higher issuance plan on Thursday.

Issuance of 300 billion pounds would be a record for any financial year, topping the 227.6 billion pounds issued in 2009/10 in the aftermath of the global financial crisis.

The new remit will be published after the Office for National Statistics releases its public finances data for March, concluding the 2019/20 financial year.

Earlier this month the Office for Budget Responsibility — Britain’s fiscal forecasters — said the government’s huge spending plans to offset the coronavirus hit to the economy meant the budget deficit could hit 273 billion pounds ($342 billion) in the 2020/21 tax year — five times its previous estimate.

So far, investors have shown little sign of balking at the jump in borrowing although the Bank of England this month agreed to expand the government’s overdraft facility at the central bank, in case it struggles to raise cash in the debt market.

Forecasts for gilt issuance in 2020/21 ranged from 240 billion to 374 billion pounds. Those on the lower end of forecasts said they expected the DMO to announce further increases to its remit later in the financial year.

Some respondents said it was difficult to forecast what the DMO would come out with on Thursday.

“Pin the tail on the DMO!” was the reaction of one of them.

The survey also showed the DMO would likely bump up its planned net Treasury bill issuance by around 17 billion pounds.

(Reporting by Andy Bruce; Editing by Catherine Evans)