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#1: 0.375% Oct-26

GILT AUCTION PREVIEW
  • The DMO will launch its final new issue of the fiscal year this morning with the GBP3bln of the new 5-year 0.375% Oct-26 gilt on offer.
  • Including the two linkers, this will be the 13th new gilt of the fiscal year.
  • As with all of this week's auctions, we are likely to see the highest yield for this maturity in over a year.
  • Demand has stayed strong for UK 5-year gilts in recent auctions with bid-to-covers all in excess of 2x this fiscal year and tails ranging from 0.1-0.4bps. Indeed, last month's auction of the 0.125% Jan-26 gilt saw the second highest bid-to-cover of the fiscal year of 2.78x (although this was before the global FI sell-off).
  • Note that the gilt will be not eligible for the BoE's APF programme until there is GBP4bln nominal outstanding (which will be after the second auction of the gilt).
  • Timing: Results will be available shortly after the auction closes at 10:00GMT with a further GBP750mln available to successful bidders through the PAOF.

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