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4.50% Jun-28 gilt

GILT AUCTION PREVIEW
  • The DMO will come to the market this morning to sell hold its final auction of the year with GBP3.0bln nominal of the short 5-year 4.50% Jun-28 gilt on offer.
  • The auction will be the smallest since the auction was launched; all other auctions have been for GBP3.75-4.00bln but this auction has been downsized so that the DMO doesn’t overshoot its short-dated FY23/24 funding target (although it will be exceeded if there is any takeup in the ensuing PAOF).
  • The auction will also be the last for the 4.50% Jun-28 gilt as the on-the-run 5-year gilt ahead of the launch of the new Jul-29 gilt that is due to be auctioned for the first time on 30 April.
  • Given the smaller auction size, there is a good chance that we see a tighter tail and stronger bid-to-cover. The bid-to-covers have ranged from 2.19x to 3.34x since the launch (mean 2.58x) with tails ranging from 0.4bp to 2.1bp (mean 1.0bp).
  • Note that the previous auction held on 21 February was the strongest auction to date for the gilt on both of these metrics.
  • Timing: Results will be available shortly after the auction closes at 10:00GMT with a further GBP750mln available to successful bidders via the PAOF.
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