January 23, 2023 11:43 GMT
30-year 3.75% Oct-53 gilt
- The DMO will launch its new 30-year 3.75% Oct-53 gilt via syndication this week (most likely on Tuesday).
- There is GBP5.0bln left in the DMO’s issuance plan allocated to the transaction, but there is also a GBP1.5bln unallocated portion of issuance that could see the size of the transaction rise to GBP6.0bln (fairly likely) or even GBP6.5bln (a bit less likely in our view).
- The 3.75% Oct-53 gilt will replace the 1.25% Jul-51 gilt as the on-the-run 30-year gilt. The 1.25% Jul-51 gilt was launched via syndication in April 2021 with GBP6.0bln sold from books of GBP69.4bln. Each reopening since has been via auction with all auctions seeing a bid-to-cover in excess of 2x, with 2.10x seen in December and 2.13x in October.
- We would expect a relatively strong syndication, particularly given the BOE has successfully unwound its Financial Stability Portfolio quicker than most analysts (and probably the BOE themselves) expected.
- Note that the 3.75% Oct-53 gilt will be reopened via auction on 21 March and ahead of that we will have the first long-dated APF sales operation next week (30 January) as well an auction of the 1.50% Jul-53 green gilt on 22 February.