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Better 5-year gilt launch than it appears at first look

GILT AUCTION RESULTS
  • A wider tail and a lower bid-to-cover than the previous 5-year gilt auction (at the launch of the new 4.125% Jul-29 gilt). However, as we noted in the preview, we had been looking for a wider tail than previously and a fall in the bid-to-cover is also not surprising given that we saw the more normal size of GBP4.0bln sold today (whereas in March GBP3bln was sold so the DMO didn't overshoot its funding target too much at the end of the fiscal year).
  • So on paper, the auction looks weaker than previously, but taking into account that this is a new issue and the regular auction size, it is stronger than it appears at first look.
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  • A wider tail and a lower bid-to-cover than the previous 5-year gilt auction (at the launch of the new 4.125% Jul-29 gilt). However, as we noted in the preview, we had been looking for a wider tail than previously and a fall in the bid-to-cover is also not surprising given that we saw the more normal size of GBP4.0bln sold today (whereas in March GBP3bln was sold so the DMO didn't overshoot its funding target too much at the end of the fiscal year).
  • So on paper, the auction looks weaker than previously, but taking into account that this is a new issue and the regular auction size, it is stronger than it appears at first look.