Most people would not want to be described as predictable, but that label suits Robert Stheeman just fine.
“Mr Gilts”, as he is known in the markets, has headed the Government’s Debt Management Office (DMO) since 2002 and his main aim is that the 49 debt auctions it holds this year will run smoothly and without surprises.
Despite having the huge task of refinancing Britain’s mountain of national debt, which has topped £1 trillion for the first time this year, he doesn’t lose any sleep about these auctions failing. “We can’t force people to buy gilts. I can’t do anything about that,” he said.
Instead, Mr Stheeman’s main concern is that the operational side of the auctions runs without glitches. He recalls the moment when “some bright spark” sawed through a cable about an hour before an auction, cutting off the electricity supply in the part of the City where the DMO is based.
“We had to run the auction by powering up the dealing desks with the use of an emergency generator. The rest of us just sat here, without access to e-mails and the outside world, yet thanks to investment in our contingency arrangements we were able to hold the auction as planned,” he said.
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After a stressful time during the 2009 downturn, the DMO has been enjoying super-low gilt yields recently, with investors flocking to Britain as the eurozone crisis refuses to go away.
The Chancellor has been taking the credit, saying that the low yields are a response to confidence in the Government’s deficit-busting plans. Mr Stheeman argues, though, that there is no single clear-cut reason. “I can’t tell you, and I don’t think anyone can ... to what precise extent the yield on a ten-year gilt can be ascribed to expectations of monetary policy — how much of it is due to the fact that we’re a safe haven, or how much is due to the fact that we are triple-A rated.”
Mr Stheeman hit the headlines in 2005 when he signed off on the Government’s issue of 50-year bonds — the first of its kind in 45 years. It now appears that a bigger event is coming his way as the Chancellor will announce in the Budget on Wednesday that he is exploring the possibility of issuing 100-year bonds in order to take advantage of Britain’s safe-haven status.
“The aims of the consultation are to establish the scale of possible demand and whether there would be good value for the Exchequer,” said Mr Stheeman.
Ten years ago, he said, he would not have believed yields could be this low. “It shows the wisdom of not trying to predict the future. There are a lot of analysts who, over the past couple of years, have predicted doom and gloom in the gilts market. The very best can get it wrong.”
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Mr Stheeman says that some foreign investors are keen on gilts as they are worried about developments in the eurozone. However, there is a worry that Britain’s borrowing costs could rise if the country loses its triple-A credit rating. Fitch, one of the big three rating agencies, last week followed Moody’s and put the UK on “negative outlook”.
He feels, though, that people can be “overly concerned” with ratings. “Look at what happened to the United States last year. Following the downgrade by Standard & Poor’s, their yields continued to decline and decline and they are also now at record lows. I’m not saying the ratings agencies aren’t important, but I think that the media does perhaps ascribe to them a level of significance that is not always justified.”
Q&A
Who, or what, is your mentor? I’m lucky enough to have come across people who genuinely took an interest in me and gave me the opportunity to develop. The same has happened to me in the Debt Management Office and in the Treasury
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Does money motivate you? Only if there are at least nine zeros afterwards
What was the most important event in your working life? Making the decision to move from the private sector to the public sector, as I did in 2002
Which person do you most admire? My maternal grandfather, who was born in a very different world and a very different age in Germany in 1879. He saw the world in which he grew up change for him beyond recognition. He and his family had to leave everything behind in the 1930s and come here. Yet he accepted all this change with equanimity
What gadget must you have? My iPad
What does leadership mean to you? It’s about achieving results with and through other people, while trying to maintain a sense of confidence and humility
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How do you relax? With my family at home
CV
Born June 7, 1959, in London
Education Bank business degree from the Hamburg Chamber of Commerce
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Career:
1979-1985: Vereins-und Westbank in Hamburg
1986-2002: Deutsche Bank — rising to the position of director of the debt capital markets group in London
2003-present: chief executive of the UK Debt Management Office
Family Married with four children