Standard and Poor’s may have put the UK on “negative outlook” over fears about the country’s ballooning debt, but this has yet to dissuade foreign investors from tapping into the £220 billion ($359 billion) in government bonds that Britain is set to issue this year.
"Over the last few years the increase in overseas holdings of gilts has actually been quite dramatic," Head of the Debt Management Office Robert Stheeman told CNBC.
“Six or seven years ago overseas holdings made up about 16 to 17% of our entire portfolio," Stheeman said. "Now that figure has doubled and of a much increased portfolio.”
At a time when the UK government is issuing more bonds than even foreign investors are particularly attracted to short and medium dated gilts, according to Stheeman.
But each auction of government debt presents its own set of challenges, he added.