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#2: 1.625% Oct-71

GILT AUCTION PREVIEW
  • This morning will also see the longest-dated gilt, the 50-year 1.625% Oct-71, on offer for GBP1.25bln.
  • This will be the largest auction of the gilt to date with the three prior auctions having seen GBP1.00bln on offer (and the three offerings before that having been syndications).
  • The 30s50s curve remains downward sloping with the yield on the 1.625% Oct-71 17.3bp below the 0.625% Oct-50 at the time of writing, this is within the range seen in the first three months of 2021, but lower than the generally 18-21bp range seen through most of the April to May period.
  • We expect demand for the 1.625% Oct-71 gilt to remain strong and look for a successful auction this morning.
  • The April auction saw a bid-to-cover of 2.23x but relatively wide tail of 0.8bp whereas the auctions in February 2021 and October 2020 saw tails of 0.2bp and 0.1bp respectively.
  • We note that the 1.625% Oct-71 gilt is scheduled to be sold again on 20 July and 7 September.
  • Timing: Results will be available shortly after the auctions closes at 11:30BST with a further GBP312.5mln available to successful bidders via the PAOF.
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