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1.00% Jan-32

GILT AUCTION PREVIEW
  • The DMO will come to the market this morning with GBP2.25bln of the 1.00% Jan-32 gilt on offer.
  • This will be the first reopening of the benchmark 10-year gilt which was launched on 1 December, also for GBP2.25bln.
  • That auction was relatively weak for a 10-year gilt. The bid-to-cover of 2.23x was the lowest bid-to-cover for a 10-year gilt auction since February 2020 (i.e. before the pandemic really hit UK markets). It also saw a tail of 1.9bp, something that had not been seen at a gilt auction of any maturity since June 2019 (which was also an auction of a 10-year gilt).
  • The two conventional gilt auctions in January (5-year and 7-year) saw bid-to-covers and tails more in line with their recent norms so the hope would be for a more successful auction of the 1.00% Jan-32 gilt today.
  • However, that will partly depend on how volatile markets are around the time of the auction.
  • Market colour: Since 24 January, yields have moved higher and are now 48bp above the lows of that day.
  • Timing: Results will be available shortly after the auction closes at 10:00GMT with a further GBP562.5mln available to successful bidders through the PAOF.
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