UK DMO Says Stg7.98bn Gilts Acquired From RM Cancelled

[TrueBlueTerrier]

UK DMO Says Stg7.98bn Gilts Acquired From Royal Mail Cancelled


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LONDON (MNI) - The UK Debt Management Office (DMO) announced Monday that it has cancelled Stg7.98 billion worth of gilts acquired by the government following the transfer of the Royal Mail Pension Plan (RMPP) into the public sector on April 1.

"As stated at Budget 2012, it is the Government's intention to cancel this gilt portfolio during 2012-13", the DMO said.

Conventional gilts make up Stg2.24 billion of the Royal Mail portfolio and index-linked gilts make up Stg5.736 billion.

The DMO said that it invites feedback, at its quarterly consultation meetings with Gilt-edged Market Makers and investor representatives that is due to be held on May 28, on the timing for cancellation(s) during 2012-13, "considering any specific timing constraints or preferences and minimum notice periods, and taking into account the effect that cancellation(s) will have on market indices".

For operational reasons, the Government will retain a small minority of the gilts until Q4 FY2012-13, added the DMO.

The DMO added that it will provide the market with good notice of any cancellations.

[chunk]

Can anybody simplify this for me?
although not generally cerebrally challenged I'm not familiar with banking
terms /acronyms .
I'm guessing stg= sterling this has im sure
something to do with quantitative easing and or written off debt.

[claretandblue]

i think it means theyve started cashing in the assets of our pension fund.

[clashcityrocker]

The DMO said that it invites feedback, at its quarterly consultation meetings with Gilt-edged Market Makers and investor representatives that is due to be held on May 28

Let's go.

[Straight4ward]

Can anybody simplify this for me?
although not generally cerebrally challenged I'm not familiar with banking
terms /acronyms .
I'm guessing stg= sterling this has im sure
something to do with quantitative easing and or written off debt.

This would be my guess;

The government raises money by issuing gilts which are bought by investors, in this case RM’s Pension fund. So we “loaned” nearly £8 billion to the government in exchange for these gilts.

Dividends are payable and at some point the government was due to buy them back at the end of their term.

As the Government has now taken over RM’s Pension fund they have acquired their own "promissory notes" and, at a stroke, they have been able to wipe out this £8 billion debt.

All smoke and mirrors? You bet!

[chunk]

Thanks for confirming my suspicions.
The government owed RM 8 billion.
It takes over responsibility for the pension fund,and as result avoids having to pay pay it back!
it can rip up the gilt/loan agreement!
The net result the government has robbed the pension fund of 8 billion.

this has nothing to do with the pension shortfall?
this is another 8 billion?

[coolasluck]

they always wanted to get their hands on the pension fund anyway,no secret there. :ncfo