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0.50% Oct-61

GILT AUCTION PREVIEW
  • The DMO will come to the market this morning with GBP1.25bln of the 0.50% Oct-61 40-year benchmark on offer.
  • This will be the fourth and final auction for the gilt scheduled in 2021 (with an auction of the 0.50% Oct-61 gilt having been held once per quarter).
  • The auction size will be smaller than the last two auctions which saw GBP1.5bln on offer, but in line with the GBP1.25bln size of the March auction.
  • Demand for the gilt has remained decent with bid-to-covers ranging from 2.27-2.63x and tails from 0.2-0.4bp.
  • For almost two months, yields have traded 11-13bp below those of the benchmark 30-year gilt, the 1.25% Jul-51.
  • With yields over 1.40% at the time of writing, this week's auction is very likely to see the highest yield recorded at auction for this gilt, surpassing the 1.264% seen at the May auction.
  • Timing: Results will be available shortly after the auction closes at 10:00BST with a further GBP312.5mln available to successful bidders through the PAOF.

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