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#2: 0.625% Oct-50

GILT AUCTION PREVIEW
  • GBP1.75bln on the 0.625% Oct-50 gilt will also be on offer this morning.
  • This will be the eight auction of the 30-year benchmark since its syndicated launch in June.
  • Following today's auction, the 0.625% Oct-50 gilt will become the third largest 20+ year gilt in terms of the nominal amount outstanding.
  • Demand for the 30-year sector has remained strong with bid-to-covers getting higher in every single auction so far (from 1.68x in July to 2.64x in the last auction in December).
  • Tails have been a bit more volatile, however, but all auctions of the gilt since August have seen tails in the region of 0.1-0.5bp.
  • With today's auction a slightly smaller size than the December auction of GBP2.00bln and with strong demand seen in the syndicated launch of the new 25-year 0.875% Jan-46 gilt, we look for another successful auction.
  • We note that the 0.625% Oct-50 gilt is set to be sold again via auction on 23 February.
  • Timing: Results will be available shortly after the auction closes at 11:30GMT with a further GBP437.5mln available through the PAOF to successful bidders.

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