CORRECTED-MNI: Fed's Hammack-Near Or At Time To Slow Rate Cuts

MNI BRIEF: Fed's Goolsbee Sees Rates Fair Bit Lower In A Year

CANADA JOBLESS RATE +6.8% VS FORECAST +6.6%, PRIOR +6.5%

MNI China Daily Summary: Friday, December 6

MNI: PBOC Net Drains CNY288.1 Bln via OMO Friday

MNI: PBOC Sets Yuan Parity Lower At 7.1848 Fri; -1.64% Y/Y

MNI: UNIV OF MICHIGAN CONSUMER SENTIMENT PRELIMINARY DEC INDEX 74.0

CANADA NOV IVEY PURCHASING MANAGERS INDEX 52.3 SA

EZ/UK Bond Supply Calendar: Austria, UK Auction on Tuesday

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

GILT AUCTION PREVIEW: 0.125% Jan-26 Gilt Tender

GILT AUCTION PREVIEW
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets
  • The DMO will come to the market this morning to hold a GBP2.0bln tender for the 0.125% Jan-26 gilt. As this is a tender there will be no PAOF and there will be no option for non-competitive bids.
  • This will be the shortest gilt issuance for some time with the only other sub-2-year gilt auction in recent times seeing the 3.50% Oct-25 gilt sold for GBP4.25bln at auction in November. That auction saw a bid-to-cover of 2.36x to wide tail of 2.0bp. However, we don't think that will be representative of today's result.
  • Today's tender is being held purely in response to strong market demand. If the DMO did not think there would be a successful operation today, it would not have called the tender in the first place, and presumably the consultation responses were strong enough to convince the DMO it should go ahead with the tender.
  • Furthermore, the tender at GBP2.0bln nominal is relatively small in size - smaller than the 12-month UKTB line which will see GBP2.5bln sold this week. And indeed this week's 12-month UKTB auction will be a smaller size than the GBP3.0bln from last week. So presumably there may be some market participants who may prefer to buy at today's tender than at tomorrow's UKTB auction.
  • It is also noteworthy that the 0.125% Jan-26 gilt matures in the next fiscal year (2025/26). And so the extra GBP2.0bln nominal sold today will have to be added to next year's anticipated funding needs.
  • The DMO has announced that the proceeds raised today (likely around GBP1.9bln cash) will be taken from the "unallocated" portion of issuance which will leave only around GBP3.1bln in the pot ahead of any updated remit accompanying the budget - pretty much all of which is likely needed for the long syndication bucket due to the size of last week's 4.375% Jan-40 syndication.
305 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
  • The DMO will come to the market this morning to hold a GBP2.0bln tender for the 0.125% Jan-26 gilt. As this is a tender there will be no PAOF and there will be no option for non-competitive bids.
  • This will be the shortest gilt issuance for some time with the only other sub-2-year gilt auction in recent times seeing the 3.50% Oct-25 gilt sold for GBP4.25bln at auction in November. That auction saw a bid-to-cover of 2.36x to wide tail of 2.0bp. However, we don't think that will be representative of today's result.
  • Today's tender is being held purely in response to strong market demand. If the DMO did not think there would be a successful operation today, it would not have called the tender in the first place, and presumably the consultation responses were strong enough to convince the DMO it should go ahead with the tender.
  • Furthermore, the tender at GBP2.0bln nominal is relatively small in size - smaller than the 12-month UKTB line which will see GBP2.5bln sold this week. And indeed this week's 12-month UKTB auction will be a smaller size than the GBP3.0bln from last week. So presumably there may be some market participants who may prefer to buy at today's tender than at tomorrow's UKTB auction.
  • It is also noteworthy that the 0.125% Jan-26 gilt matures in the next fiscal year (2025/26). And so the extra GBP2.0bln nominal sold today will have to be added to next year's anticipated funding needs.
  • The DMO has announced that the proceeds raised today (likely around GBP1.9bln cash) will be taken from the "unallocated" portion of issuance which will leave only around GBP3.1bln in the pot ahead of any updated remit accompanying the budget - pretty much all of which is likely needed for the long syndication bucket due to the size of last week's 4.375% Jan-40 syndication.