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0.625% Oct-50

GILT AUCTION PREVIEW
  • The only gilt auction of the week is scheduled to take place this morning with GBP2.0bln of the 0.625% Oct-50 gilt on offer.
  • Following the auction, the gilt will have over GBP30bln nominal outstanding, the highest amount outstanding of any 20+ year gilt.
  • Since its launch in June, the gilt has rarely traded above par but with the recent fixed income sell-off this week's auction will be the second gilt auction to see a yield above 1% this fiscal year (at the time of writing the prevailing yield was well in excess of 1% at 1.282%).
  • We also note that last week's auctions saw moderately wider tails than have been seen recently.
  • Since August, tails for auctions of the 0.625% Oct-50 gilt have ranged from 0.1-0.5bp, but two auctions in July saw tails of 1.1bp and 1.2bp respectively.
  • We will therefore be watching closely to see how the tail holds up following the recent sell-off.
  • The 0.625% Oct-50 gilt is not due to be sold again this fiscal year, but the 1.75% Jan-49 gilt is due to be re-opened on 23 March.
  • Timing: Results will be available shortly after the auction closes at 10:00GMT with a further GBP500mln available to successful bidders through the PAOF.
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