#1: The 0.125% Jan-26 gilt.....>

GILT AUCTION PREVIEW: #1: The 0.125% Jan-26 gilt will be on offer for GBP3.25bln

today and will kick off issuance for the week.

- This will be the first gilt issued since the BOE announced an unexpected

tapering of its APF purchases and so will be closely watched.

- Today's auction will be the second for the 0.125% Jan-26 gilt that the DMO is

building up to be the five-year benchmark following its launch earlier this

month. The gilt currently trades at a 4.5bp discount to the 0.625% Jun-25 gilt

and has traded in a 3.5-5.5bp range since its launch. The initial auction saw a

decent bid-to-cover of 2.72x, yield of 0.048% and a tail of 0.2bp. That auction

was also for GBP3.25bln but with only GBP78.8mln taken up in the PAOF, the gilt

has been ineligible for the Bank of England's APF scheme as it has a nominal

size of under GBP4bln outstanding. This will obviously change after today's

auction. The 0.125% Jan-26 gilt will be on offer again on 14 July.

RESULTS: Auction results will be released shortly after the auction closes at

10:00BST with a further GBP812.5mln nominal available through the PAOF to

successful bidders.